December 3, 2024
New Delhi, India
USDINR Analysis
The Indian Rupee (INR) traded weaker on Tuesday, grappling with multiple challenges after hitting a record low in the previous session. The local currency continues to face pressure from disappointing domestic macroeconomic data, persistent foreign fund outflows, and rising demand for the US Dollar (USD).
US President-elect Donald Trump’s recent threat to impose a 100% tariff on BRICS nations, should they attempt to weaken the dollar, has added to the rupee’s woes.
RBI Intervention Offers Some Relief
Market observers anticipate routine interventions from the Reserve Bank of India (RBI) to stabilize the rupee. Key economic events later this week, including the RBI’s interest rate decision and US Nonfarm Payrolls data, could influence the currency’s trajectory.
Macroeconomic Developments Impacting INR
- Global PMI and Fed Signals:
The US ISM Manufacturing PMI improved to 48.4 in November, signaling slower contraction than anticipated. Meanwhile, Federal Reserve officials, including Christopher Waller and Raphael Bostic, expressed mixed views on potential rate cuts, keeping markets on edge.
- Manufacturing PMI Decline:
The HSBC India Manufacturing PMI dropped to 56.5 in November from 57.5 in October, below the market expectation of 57.3. Despite the decline, the index remains in expansionary territory.“Strong international demand continues to support growth,” noted Pranjul Bhandari, Chief India Economist at HSBC.
- Falling Forex Reserves:
India’s forex reserves declined by $1.31 billion, reaching $656.582 billion as of November 22, further straining the rupee.
Also Read: Government Scraps Windfall Tax on Crude Oil and Fuel Exports
Outlook for INR
While global uncertainties and weak domestic indicators weigh on the rupee, RBI interventions and data releases later this week could provide clarity on its future movement.
USDINR was trading near 84.741 up +0.018(+0.02%).
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