January 2, 2025
New Delhi, India
USDINR Today
Rupee (INR) continued its downward trajectory on Thursday, pressured by several factors, including increased USD demand from importers, elevated US Treasury yields, and concerns over India’s slowing economic growth.
Key Drivers
- USD Demand: Persistent bids from importers have heightened pressure on the INR.
- US Treasury Yields: Rising 10-year yields in the US further supported the Greenback.
- Domestic Concerns:
- India’s fiscal deficit for April-November FY25 expanded to ₹8.47 trillion, or 52.5% of the annual estimate, up from 50.7% during the same period last year.
- Real GDP growth for FY25 is projected at 6.6%, signaling slower economic momentum.
RBI Intervention
The Reserve Bank of India (RBI) is expected to continue intervening in the forex market to manage volatility, which might limit further downside for the INR.
Market Data Releases to Watch
- India:
- December HSBC Manufacturing PMI, which will provide insights into the manufacturing sector’s performance.
- US:
- Weekly Initial Jobless Claims.
- S&P Global Manufacturing PMI for December.
Expert Insights
Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors LLP, noted, “The rupee remains vulnerable to downward pressure, driven by robust USD demand and firm US yields.”
Reuters also highlighted bearish sentiment surrounding the INR due to the Greenback’s resilience near 108.48 and growing concerns about India’s trade deficit and economic slowdown.
Global Context
- US Housing Market:
- The Housing Price Index rose by 0.4% MoM in October, below the 0.5% forecast.
- The S&P/Case-Shiller Home Price Indices increased by 4.2% YoY, surpassing the 4.1% estimate.
Outlook
With domestic and global economic factors influencing currency dynamics, the INR remains under pressure. However, continued RBI intervention may provide some stability in the near term. Investors await key data releases from India and the US for further market cues.
Disclaimer:
CurrencyVeda provides this news article for informational purposes only. We do not offer investment advice or recommendations. Before making any investment decisions, please conduct thorough research, consult with financial experts, and carefully consider your financial situation, risk tolerance, and investment goals. Investing in the stock market carries risks, and it’s essential to make informed choices based on your individual circumstances. CurrencyVeda is not liable for any actions taken based on the information provided in this article.
