January 16, 2025
New Delhi, India
USDINR Today
The Indian Rupee (INR) traded ia trading lower today during the Asian session, pressured by higher crude oil prices and persistent foreign fund outflows. Despite the challenges, the Reserve Bank of India’s (RBI) intervention and a weaker US Dollar provided some support to the local currency.
Key Factors Impacting INR:
- Crude Oil Prices: India, which imports nearly 90% of its oil requirements, faced renewed pressure as global crude prices surged, contributing to the rupee’s depreciation.
- Foreign Fund Outflows: Persistent outflows from foreign investors added to the downward pressure on the INR.
- RBI Intervention: The central bank’s routine interventions, aimed at stabilizing the currency, have utilized nearly $70 billion of forex reserves since their peak of $705 billion in September 2024.
Supporting Factors:
- US Dollar Weakness: Cooler-than-expected US inflation data raised expectations of two rate cuts by the Federal Reserve in 2024, potentially weakening the US Dollar and lending support to the INR.
- Trade Deficit Improvement: India’s trade deficit narrowed sharply to $21.94 billion in December, compared to $37.84 billion in November, driven by reduced gold and oil imports.
Economic Outlook:
India is poised to surpass Japan to become the world’s fourth-largest economy by 2026, as per the PHDCCI. The nation’s GDP is projected to grow by 6.8% in the current fiscal year and 7.7% in FY26.
Global Developments:
- US Inflation Data: The US Consumer Price Index (CPI) rose 2.9% YoY in December, in line with market expectations. Core CPI, excluding food and energy, grew 3.2%, slightly below forecasts.
- Fed’s Beige Book: The US economy showed slight to moderate growth in late November and December, buoyed by strong holiday sales.
Upcoming Data:
Investors now await US retail sales figures for December and weekly initial jobless claims data, expected to provide fresh cues for the forex market.
The Indian Rupee remains under pressure due to rising oil prices and foreign fund outflows. However, a weaker US Dollar and improved trade deficit figures offer some respite. Market participants will closely monitor upcoming US economic data for further direction.
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