September 10, 2024
New Delhi, India
USDINR
The Indian Rupee (INR) held its ground against the US Dollar (USD) on Tuesday, with traders speculating that the Reserve Bank of India (RBI) intervened in the forex market to prevent the domestic currency from weakening past the 84.00 mark. The INR’s stability comes amid a broader market anticipation that the central bank is supporting the currency.
Key Factors Impacting INR:
- RBI Intervention: The INR remains stable as traders expect the RBI to intervene to support the domestic currency.
- USD Appreciation: The US Dollar is gaining strength due to decreasing expectations of a significant interest rate cut by the Federal Reserve in September.
- Oil Prices: Lower oil prices are providing some relief to the INR, as reduced import costs benefit India, the world’s third-largest oil consumer and importer.
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Market Dynamics and Outlook:
The USD/INR pair could appreciate further if Asian markets experience a decline, driven by concerns about the US economy’s potential slowdown. However, easing oil prices might help reduce downward pressure on the INR.
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Global Economic Indicators:
- US Economic Data: ADP Employment Change indicated an increase in private-sector employment, while weekly Initial Jobless Claims remained below initial expectations.
- India’s FX Reserves: India’s foreign exchange reserves reached a record high of $683.99 billion, boosted by foreign investment following the inclusion of Indian assets in JPMorgan’s major emerging market debt index.
- US Federal Reserve: The CME FedWatch Tool shows a slight decrease in the likelihood of a 50 basis points rate cut by the Fed in September, now at 29%, down from 30% a week ago.
- Chicago Fed President’s Remarks: Austan Goolsbee indicated that US Fed officials are beginning to align with the market’s sentiment for a policy rate adjustment, which was rated as dovish by FXStreet’s FedTracker.
Economic Growth in India:
Pranjul Bhandari, Chief India Economist at HSBC, noted, “The Composite PMI for India continued to show strong growth in August, driven by accelerated business activity in the service sector.” The World Bank has also revised India’s growth forecast to 7% for the current fiscal year (FY25), up from the previous estimate of 6.6%.
Overall, the Indian Rupee’s position will likely be influenced by global market trends, central bank actions, and economic data releases in the near term.
Disclaimer:
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