November 25, 2024
New Delhi, India
USDINR Analysis
Rupee (INR) extended its decline during Wednesday’s Asian trading session, pressured by global factors. Donald Trump’s tariff threats against key trading partners, including Mexico, Canada, and China, strengthened the US Dollar (USD), adding to the INR’s woes.
Factors Impacting the INR
- Trump’s Tariff Threats: Expectations of a 25% tariff on imports support the USD, creating pressure on the INR.
- Federal Reserve’s Cautious Approach: The latest FOMC minutes revealed policymakers are hesitant to cut rates amid easing inflation and strong labor markets, providing further USD strength.
- MSCI Index Rebalancing: Significant foreign inflows from MSCI index adjustments brought over $1 billion into Indian equity markets, partially offsetting the INR’s downside.
RBI Intervention on the Horizon
Analysts suggest that the Reserve Bank of India (RBI) could step in to stabilize the rupee if its decline continues, helping cap further losses.
Upcoming Data to Watch
The market’s attention is now on the release of key US economic data:
- Core PCE Inflation Data: A critical indicator for assessing Fed rate decisions.
- Initial Jobless Claims: Weekly labor market data.
- Chicago PMI and Durable Goods Orders: Insights into economic activity.
While global pressures weigh on the INR, robust inflows and potential RBI intervention might stabilize the currency. Traders will closely monitor US inflation data for further cues on USDINR movement.
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