November 29, 2024
New Delhi, India
USDINR Today
Rupee (INR) hovered near its record low during Friday’s Asian session, pressured by both domestic and global factors.
Drivers of Weakness
- Global Factors:
- Rising US Treasury yields and month-end USD demand from importers weighed on the INR.
- Foreign Portfolio Investors (FPIs) withdrew $1.4 billion from Indian equities on Thursday, with a monthly outflow of $11 billion in October.
- Domestic Factors:
- Negative sentiment in domestic equities saw the BSE Sensex drop 1.5%.
- Expectations of GDP growth aligning with the Reserve Bank of India’s (RBI) target of 7% for Q2 FY25, but weaker consumption may dampen the economy’s pace.
Market Expectations
- RBI Intervention:
The RBI is expected to intervene in the forex market to curb excessive volatility by selling USD. - Upcoming Data Releases:
- Federal Fiscal Deficit for October and Q2 FY25 GDP growth data are due later today.
- Strong GDP numbers could potentially stabilize the INR.
- Central Bank Policies:
- The RBI is expected to hold rates in December amidst high inflation.
- A possible Fed rate cut in December may shift global sentiment.
Outlook
The INR faces challenges due to persistent FPI outflows, global USD strength, and domestic economic concerns. Market participants will closely monitor fiscal and GDP data for cues on INR’s near-term direction.
Disclaimer:
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