USDINR Gains Ground as Investors Await CPI Data and FOMC Meeting


December 12, 2023

New Delhi, India

Indian Rupee Responds to Stronger US Dollar

The Indian Rupee (INR) experienced a dip against the US Dollar (USD) on Tuesday, driven by increased demand for the USD. This follows the Reserve Bank of India’s decision to maintain the benchmark repo rate at 6.50%, aligning with expectations as the RBI monitors inflationary risks.

Economic Highlights in India

India’s economy outperformed estimates in the September quarter, marking a robust 7.6% growth and positioning it as the fastest-growing major country. The Reserve Bank of India projects a 7.0% GDP growth rate for India in the fiscal year 2024.

Inflation and Interest Rate Landscape

The RBI remains cautious, focusing on the withdrawal of accommodation as it forecasts retail inflation in FY24 at 5.4%. This cautious stance has implications for the interest rate scenario in India.

WTI Surges to $71.80 Amidst Economic Signals and Geopolitical Tensions

Global Factors and Market Expectations

Global headwinds pose challenges for the Indian Rupee, with market players closely eyeing US economic indicators. There is a notable anticipation of rate cuts by the Federal Open Market Committee (FOMC) from March 2024, influencing both Indian and US markets.

Technical Analysis of USDINR Pair

Technically, the USDINR pair maintains a bullish stance, trading within a range of 82.80 to 83.40 over the past three months. The 100-day Exponential Moving Average (EMA) and the Relative Strength Index (RSI) above 50.0 signal upward momentum.

Market Outlook and Closing Remarks

Investors are closely monitoring upcoming Consumer Price Index (CPI) data releases in both India and the US, along with the FOMC meeting, as these factors will significantly influence Indian government bond yields and the trajectory of the Indian Rupee in the coming week.

Also Read: India’s Forex Reserves Soar Beyond $600 Billion Mark, Indicating Economic Resilience


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