September 11, 2024
New Delhi, India
USDINR Today
The Indian Rupee (INR) remained stable against the US Dollar (USD) on Wednesday, trading around the 84.00 level amid growing speculation of potential interventions by the Reserve Bank of India (RBI) in the foreign exchange market. Traders believe the RBI may step in to support the INR and prevent it from weakening beyond this critical level.
Factors Supporting the Indian Rupee:
- Lower Crude Oil Prices: The INR gained support from a decline in crude oil prices, which eased to $64.75 per barrel, their lowest since December 2021. As the world’s third-largest oil consumer and importer, India benefits from reduced import costs, which can alleviate pressure on the Rupee.
- Stable Indian FX Reserves: India’s foreign exchange reserves reached a record high of $683.99 billion as of August 30, buoyed by strong foreign investment and the anticipated inclusion of Indian assets in JPMorgan’s major emerging market debt index.
- Strong Domestic Economic Indicators: India’s Composite PMI indicated robust growth in August, driven by an increase in business activity and new domestic orders, particularly in the service sector, marking its fastest expansion since March.
Challenges for the US Dollar:
- Falling Treasury Yields: The US Dollar faced headwinds as US Treasury yields continued to decline ahead of the release of the US Consumer Price Index (CPI) data, which could provide further insight into the Federal Reserve’s interest rate decisions.
- Market Expectations for Fed Rate Cut: According to the CME FedWatch Tool, markets are fully pricing in at least a 25 basis point rate cut by the Federal Reserve in September, with the likelihood of a larger 50 basis point cut reduced to 31.0% from 38.0% a week ago.
Meanwhile, discussions among Indian bankers and government officials suggested a push for increased issuance of short-term and green bonds to meet investor demand, highlighting ongoing considerations in India’s fiscal strategy.
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