December 11, 2024
New Delhi, India
USD Analysis
Rupee (INR) edged closer to an all-time low on Wednesday following the appointment of Sanjay Malhotra as the new Governor of the Reserve Bank of India (RBI).
- Market Reaction: Traders anticipate a dovish shift in monetary policy, raising bets on potential interest rate cuts.
- RBI Intervention: Expectations of forex market intervention by the RBI could prevent further sharp depreciation.
Key Influencing Factors
- Global and Domestic Data:
- US November CPI report due Wednesday could influence global currency markets.
- India’s CPI inflation, industrial output, and manufacturing data scheduled for Thursday are critical indicators for future market trends.
- Economic Projections:
- Economists foresee a 25 bps rate cut at Malhotra’s first MPC meeting in February or potentially sooner.
- S&P Global Ratings projects 6.8% GDP growth for FY25 and 6.9% for FY26, driven by urban consumption and infrastructure investments.
- Bond Market Signals:
- India’s 10-year bond yields fell to 6.699%, signaling dovish market expectations.
Global Currency Context
The Rupee’s slide was exacerbated by:
- Persistent strength of the US Dollar.
- Decline in Asian peers.
As market participants await key inflation data from the US and India, the rupee’s trajectory will remain in focus, with policy changes and global trends shaping its outlook.
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