The Indian Rupee (INR) experienced a decline on Monday, pressured by month-end demand for US Dollars (USD) from importers and anticipated interventions by the Reserve Bank of India (RBI). Nonetheless, strong capital inflows and a decrease in crude oil prices may help mitigate the INR’s losses.
Market participants are turning their attention to Federal Reserve Governor Michelle Bowman’s upcoming speech, which is expected to provide insights and perspectives on US interest rates. Additionally, the Chicago Purchasing Managers’ Index (PMI) and the Dallas Fed Manufacturing Business Index are set for release. In India, the August Federal Fiscal Deficit figures will also be published later today.
So far in 2024, the Indian rupee has shown relative stability against the USD, depreciating by only 0.59% this calendar year. Chief Economic Advisor V Anantha Nageswaran indicated on Friday that the Indian economy is projected to grow at a rate of 6.5% to 7% in the current financial year on a steady-state basis.
Recent data from the US Bureau of Economic Analysis (BEA) revealed that the Personal Consumption Expenditures (PCE) Price Index rose by 2.2% year-over-year in August, a decrease from 2.5% in July and below the forecast of 2.3%. Meanwhile, the core PCE, excluding volatile food and energy prices, increased by 2.7% year-over-year, aligning with the consensus and up from 2.6% previously. On a month-to-month basis, the core PCE Price Index rose by 0.1%, down from 0.2% in the prior period.
Additionally, the University of Michigan’s Consumer Sentiment Index increased to 70.1 in September, up from 66.0 in August and surpassing expectations of 69.3. Interest rate futures indicate a nearly 54% probability of a half-point rate cut in November, compared to a 46% chance for a quarter-point cut, according to the CME FedWatch Tool.
As for the INR’s performance, the daily chart indicates a continued constructive bias for the USD/INR pair, with prices holding above the key 100-day Exponential Moving Average (EMA). However, further downside appears likely, as the Relative Strength Index (RSI) is positioned below the midline at approximately 46.60.
The immediate resistance level for USD/INR is seen at 83.75, which has shifted from support. The next significant resistance is at the psychological level of 84.00. Conversely, potential support is identified at the 100-period EMA, currently at 83.62. Should the market see continued selling pressure below this threshold, a decline to 83.00 is possible, representing both a psychological barrier and the low recorded on May 24.
Related topics:
