September 18, 2024
New Delhi, India
USDINR Price
The Indian Rupee (INR) remained flat during early European trading on Wednesday, following a climb to a month-high of 83.75 in the previous session. Expectations of a deeper Federal Reserve (Fed) rate cut and significant US Dollar (USD) sales have put pressure on the USD/INR pair. However, the recovery of crude oil prices is likely to limit any major downside for the local currency.
Key Highlights
- INR Flat: The Rupee trades flat after hitting a month-high of 83.75 on Tuesday.
- Fed Meeting: The Fed’s interest rate decision is scheduled for later on Wednesday, with a potential 50 bps cut on the horizon.
- Fed Rate Cut Bets: Rising expectations of a Fed rate cut in September weigh on the USD.
- Oil Prices: An extended recovery in crude oil prices might cap Rupee gains.
Economic Data
- WPI Inflation: India’s Wholesale Price Index (WPI)-based inflation declined to a four-month low of 1.31% in August, down from 2.04% in July, coming in below market expectations of 1.80%.
- Trade Deficit: India’s merchandise trade deficit widened to $29.65 billion in August from $23.5 billion in July, as per the Ministry of Commerce and Industry.
- Forex Reserves: India’s foreign exchange reserves hit a record high of $689.2 billion as of September 6, according to the Reserve Bank of India (RBI).
Global Impact
In the US, Retail Sales rose unexpectedly by 0.1% MoM in August, surpassing the market consensus of -0.2%, while Industrial Production climbed by 0.8% MoM in August, rebounding from a prior decline of 0.6%.
Fed Rate Cut Expectations
According to the CME Fedwatch Tool, Fed funds futures suggest a 63% probability of a 50 basis points (bps) rate cut, up from 30% last week, while the chance of a 25 bps cut stands at 37%. The Fed’s decision and accompanying Summary of Economic Projections (dot-plot) will provide further clarity on the central bank’s rate path for the coming year.
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