May 28, 2024
New Delhi, India
USDINR Today
The Indian Rupee (INR) weakened in Wednesday’s early European session, pressured by significant foreign outflows and growing expectations of a potential rate cut by the Reserve Bank of India (RBI).
The outflow of approximately $900 million linked to Zomato, due to the latest MSCI index rebalancing, has weighed heavily on the currency. According to Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors, the rupee is likely to fluctuate within a range of 84.75 to 85.50 in the near term.
Adding to the rupee’s downside is month-end demand for US Dollars (USD) from Indian corporates and foreign banks. At the same time, traders are also factoring in the possibility of an RBI rate cut, which could reduce the appeal of Indian assets to foreign investors.
Crude Oil Decline, USD Weakness Offer Limited Relief
On the flip side, falling crude oil prices—a key import for India—have provided some cushion to the rupee. As the world’s third-largest oil consumer, India benefits significantly from lower oil import bills.
Meanwhile, sentiment around the US Dollar remains mixed. Concerns over US trade and fiscal policies and recent remarks from Federal Reserve officials are keeping the greenback in check. Fed’s Neel Kashkari warned that proposed tariffs could have stagflationary effects, signaling a cautious approach towards further rate changes.
What to Watch: Economic Data and Fed Minutes
Investors are now awaiting a slate of economic data that could influence both rupee and dollar movement. On the domestic front, India’s April Industrial Output and Manufacturing Output numbers are due later in the day.
Internationally, focus shifts to the Minutes of the FOMC meeting, which could offer more clarity on the US Fed’s rate stance. Also on the US economic calendar is the Richmond Fed Manufacturing Index for May.
Recent U.S. Data Snapshot
US Consumer Confidence Index rose to 98.0 in May, up from 86.0 (revised).
Durable Goods Orders in the US fell 6.3% in April, above the expected -7.9%, after a strong 7.6% rise in March.
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