January 17, 2025
New Delhi, India
USDINR Today
The Indian Rupee (INR) remained stable on Friday, bolstered by likely intervention from the Reserve Bank of India (RBI), which sold US Dollars (USD) through state-run banks. This move helped limit excessive losses. However, continued dollar demand from importers, foreign banks, and oil companies exerted pressure on the rupee.
Geopolitical uncertainties and anticipated US trade tariffs under President-elect Donald Trump pose additional risks to the INR in the near future.
Key Highlights:
- RBI Intervention:
- The central bank’s dollar sales capped depreciation near 86.50/$1, according to Anil Bhansali, head of treasury at Finrex Treasury Advisors. Post-intervention, slight depreciation was seen up to 86.55/$1.
- Trade Deficit Narrows:
- India’s trade deficit dropped significantly to $21.94 billion in December from $37.84 billion in November, driven by reduced gold and oil import bills (Ministry of Commerce and Industry).
- Global Data Watch:
- US housing data for December (Building Permits and Housing Starts) and US Industrial Production figures are due later Friday, which could influence global market sentiment.
US Market Developments:
- Retail Sales: December’s retail sales rose 0.4% month-over-month (weaker than the 0.6% expected), following a revised 0.8% gain in November.
- Initial Jobless Claims: Increased to 217K for the week ending January 10, surpassing the forecasted 210K and the prior week’s revised figure of 203K.
- Federal Reserve Outlook: Fed Governor Christopher Waller indicated potential rate cuts this year if inflation cools. Meanwhile, Chicago Fed President Austan Goolsbee expressed growing confidence in labor market stabilization.
Outlook:
The INR faces near-term headwinds from continued dollar demand and global uncertainties. However, improved trade deficit figures and proactive measures by the RBI provide some relief. Investors will closely monitor upcoming US economic data for further cues on market direction.
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