March 11, 2024
New Delhi, India
USDINR Today
Rupee (INR) continued its decline on Tuesday, weighed down by strong demand for the US Dollar (USD) from importers and persistent foreign fund outflows. The local currency remains under pressure as foreign investors have withdrawn nearly $15 billion from Indian equities this year, pushing outflows close to the record $17 billion recorded in 2022.
Traders pointed to maturities in the non-deliverable forwards (NDF) market and ongoing concerns over US trade tariffs as additional factors contributing to the INR’s weakness.
RBI Intervention and Crude Oil Prices to Provide Support
Despite the rupee’s depreciation, intervention by the Reserve Bank of India (RBI) is expected to limit sharp losses. A decline in global crude oil prices could also provide some relief, as India remains one of the world’s largest oil importers.
“The rupee weakened because of an increase in dollar demand from oil companies, as Indian firms have started purchasing oil from the US,” said a trader at a private bank.
Key Economic Data Releases This Week
Market participants are now turning their attention to the Indian and US Consumer Price Index (CPI) inflation reports for February, set to be released on Wednesday. These figures are expected to influence both USD/INR movements and future monetary policy decisions by the US Federal Reserve.
US Economic Indicators and Fed Policy
Recent US Nonfarm Payrolls (NFP) data showed job growth of 151,000 in February, lower than market expectations. Meanwhile, the US unemployment rate edged up to 4.1%, and traders are now pricing in 75 basis points (bps) of Federal Reserve rate cuts in 2024, with a first cut expected in June.
Federal Reserve Chair Jerome Powell reiterated on Friday that the US central bank will remain patient in adjusting interest rates, citing uncertainty around the impact of US trade policies on the economy.
Market Outlook
With no major economic data releases on Tuesday, USD/INR fluctuations are likely to be driven by global risk sentiment and RBI’s intervention efforts ahead of the inflation data release on Wednesday.
