July 30, 2024
New Delhi, India
USDINR Analysis
- Indian Rupee: The Indian Rupee (INR) held steady during Tuesday’s early European session despite a modest recovery in the US Dollar (USD). The local currency remains under pressure due to month-end corporate demand for USD and significant foreign fund outflows from Indian equities.
- US Dollar: The modest recovery of the USD adds to the pressure on the INR, alongside a volatile Chinese Yuan and weaker market sentiment.
Market Dynamics:
- Crude Oil Prices: Extended losses in crude oil prices might limit the downside for the Indian Rupee. As the third-largest consumer of oil behind the US and China, lower crude prices benefit India’s trade balance and reduce the pressure on the INR.
- Foreign Fund Outflows: Substantial foreign fund outflows from Indian equities further weigh on the INR, adding to the currency’s challenges amid broader market dynamics.
Upcoming Events:
- Fed Interest Rate Decision: Investors will closely monitor the US Federal Reserve (Fed) Interest Rate Decision on Wednesday. The Fed is widely expected to keep rates unchanged in the range of 5.25%-5.50% for the eighth consecutive time. Market attention will focus on any hints regarding future rate cuts, particularly the possibility of a rate cut in September.
- Indian HSBC Manufacturing PMI: The final reading of the Indian HSBC Manufacturing Purchasing Managers Index (PMI) is estimated to improve slightly to 58.5 in July from the previous reading of 58.3.
- US Employment Data: Later this week, market players will also look at the US employment data, including the ADP National Employment Report and the Nonfarm Payrolls report, scheduled for release on Thursday and Friday, respectively.
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Economic Indicators:
- US Dallas Fed Manufacturing Business Index: The index came in at -17.5 in July, down from -15.1 in the previous reading, indicating a contraction in manufacturing activity.
The Indian Rupee trades on a flat note, influenced by month-end US Dollar demand, equity outflows, and global market sentiment. Investors are keenly watching the Fed’s Interest Rate Decision and upcoming economic data for further cues on the currency’s direction.
USDINR: 83.729 down -0.020(-0.02%) at 11:32 A.M.
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