November 14, 2024
New Delhi, India
USDINR Analysis
Rupee (INR) is trading near its all-time low on Thursday despite an uptick in Wholesale Price Index (WPI) inflation. According to official data, India’s WPI-based inflation rose to 2.36% year-on-year (YoY) in October, up from 1.84% in the previous month, surpassing the market consensus of 2.20%.
Factors Pressuring the Rupee
- Foreign Fund Outflows: The continued withdrawal of foreign funds has been a significant factor in dragging down the rupee. Nearly $3 billion was pulled out of Indian stocks in November, adding to the $11 billion outflows recorded in October.
- Domestic Market Weakness: Indian equity indexes have seen a sharp decline, dropping over 9% since their peak in late September.
- US Dollar Strength: A rally in the US Dollar Index (DXY) further added to the selling pressure on the INR, keeping it steady near record lows in the early European session.
RBI’s Interventions and Crude Oil Prices
Despite the pressures, the Reserve Bank of India’s (RBI) routine interventions in the currency market have helped limit the rupee’s losses. Additionally, lower crude oil prices have provided some relief, mitigating the impact of foreign fund outflows and supporting the rupee’s stability.
Upcoming US Economic Data
Investors are closely watching upcoming US economic indicators, including:
- US Producer Price Index (PPI) for October
- Weekly Initial Jobless Claims
- Comments from Federal Reserve officials (Fedspeak)
These data points are expected to influence global market sentiment and the trajectory of the US Dollar, which in turn may impact the Indian Rupee.
US Inflation Insights
Earlier this week, the US Consumer Price Index (CPI) report showed a 2.6% YoY increase in October, aligning with market expectations. The Core CPI, which excludes food and energy prices, rose by 3.3% YoY, also matching forecasts.
The market now awaits further insights from the US PPI data, which could provide more clarity on the Federal Reserve’s future monetary policy stance.
Stay tuned to CurrencyVeda for real-time updates and insights on forex market trends.
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