- Indian Rupee gains traction amid the weaker US Dollar.
- The currency might benefit from inflows since MSCI increased India’s weight in its Emerging Market index effective from November 30.
- Investors await the US Gross Domestic Product Annualized data for the third quarter (Q3), due later on Wednesday.
Indian Rupee (INR) gathers strength on Wednesday on the foreign banks’ Dollar sales and a weaker US Dollar (USD). The Indian economy is projected to expand by over 6% this year, bringing its Gross Domestic Product close to $4 trillion. Additionally, India’s economy is anticipated to be the fastest-growing on the globe in the coming years, according to the International Monetary Fund (IMF).
The Indian Rupee potentially benefits from equities inflows due to MSCI’s decision to increase India’s weight in its Emerging Market index effective from November 30 and analysts expect equity inflows worth $1.5 billion this week. Nonetheless, the rebound in crude oil prices might cap the INR’s upside. It’s worth noting that India is particularly vulnerable to higher crude prices as the country is the world’s third-biggest oil consumer.
Market players will monitor the US Gross Domestic Product Annualized for the third quarter (Q3) on Wednesday, which is expected to expand 5.0%. Later this week, the attention will shift to India’s Gross Domestic Product (GDP) Quarterly for the second quarter (Q2), due on Thursday. Furthermore, the last phase of state elections on Thursday remains in focus as a change in government might result in modifications to current policies, which have an impact on investors.
Daily Digest Market Movers: Indian Rupee remains under pressure amid multiple challenges
- S&P Global Ratings raised India’s growth forecast for the current financial year to 6.4% from 6.0%, citing robust domestic momentum that has offset headwinds from high food inflation and sluggish exports.
- Analysts estimate that India’s GDP will grow higher than 6.0% next year, making it the fastest-growing major economy.
- The Reserve Bank of India (RBI) estimated 6.5% growth for July–September, with RBI Governor Shaktikanta Das projecting an upward surprise.
- US CB Consumer Confidence for November climbed to 102.00 versus a downward revision to 99.1.
- Richmond Fed Manufacturing Index showed activity slowed in November, falling to -5.0 from 3.0 in October.
- The S&P/Case-Shiller Home Price Index grew 3.9% YoY in September versus 2.1% prior, below the market consensus of 4.0%.
- Federal Reserve (Fed) Governor Christopher Waller said the central bank won’t need to raise rates further and may begin cutting rates if inflation continues to ease over the next three to five months.
Technical Analysis: The Indian Rupee maintains a positive outlook
The Indian Rupee trades firmer on the day. The USD/INR pair has traded in a familiar range of 82.80–83.40 since September. USD/INR maintains a bullish vibe as the pair holds above the key 100-day Exponential Moving Average (EMA) on the daily chart. The upward momentum is supported by the 14-day Relative Strength Index (RSI) that holds above the 50.0 midline, reflecting that further upside looks favorable.
The upper boundary of the trading range at 83.40 will be the immediate resistance level for the pair. Further north, the next hurdle to watch is the year-to-date (YTD) high of 83.47, en route to a psychological round figure of 84.00. On the downside, the key contention level will emerge at the 83.00 psychological mark. A breach below this level will pave the way to the confluence of the lower limit of the trading range and a low of September 12 at 82.80, followed by a low of August 11 at 82.60.
US Dollar price today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Australian Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.05% | 0.00% | -0.12% | 0.17% | 0.01% | -0.74% | -0.05% | |
| EUR | -0.03% | -0.02% | -0.17% | 0.13% | -0.02% | -0.80% | -0.07% | |
| GBP | -0.01% | 0.03% | -0.13% | 0.15% | 0.01% | -0.78% | -0.05% | |
| CAD | 0.13% | 0.18% | 0.14% | 0.30% | 0.15% | -0.61% | 0.07% | |
| AUD | -0.17% | -0.14% | -0.18% | -0.32% | -0.17% | -0.93% | -0.22% | |
| JPY | -0.02% | 0.02% | -0.02% | -0.15% | 0.14% | -0.77% | -0.06% | |
| NZD | 0.76% | 0.77% | 0.74% | 0.61% | 0.91% | 0.74% | 0.69% | |
| CHF | 0.02% | 0.06% | 0.05% | -0.08% | 0.23% | 0.04% | -0.69% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
RBI FAQs
The role of the Reserve Bank of India (RBI), in its own words, is “..to maintain price stability while keeping in mind the objective of growth.” This involves maintaining the inflation rate at a stable 4% level primarily using the tool of interest rates. The RBI also maintains the exchange rate at a level that will not cause excess volatility and problems for exporters and importers, since India’s economy is heavily reliant on foreign trade, especially Oil.
The RBI formally meets at six bi-monthly meetings a year to discuss its monetary policy and, if necessary, adjust interest rates. When inflation is too high (above its 4% target), the RBI will normally raise interest rates to deter borrowing and spending, which can support the Rupee (INR). If inflation falls too far below target, the RBI might cut rates to encourage more lending, which can be negative for INR.
Due to the importance of trade to the economy, the Reserve Bank of India (RBI) actively intervenes in FX markets to maintain the exchange rate within a limited range. It does this to ensure Indian importers and exporters are not exposed to unnecessary currency risk during periods of FX volatility. The RBI buys and sells Rupees in the spot market at key levels, and uses derivatives to hedge its positions.
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