The Indian Rupee (INR) remains under pressure on Monday, following its dip to an all-time low in the previous session. The currency’s weakness is compounded by disappointing economic data, with the HSBC India Manufacturing Purchasing Managers Index (PMI) easing to 56.5 in November, down from 57.5 in October and below the market consensus of 57.3. The lower-than-expected PMI figures have led to a negative market reaction, further weighing on the local currency.
The INR’s decline has also been influenced by broader global developments, particularly the strengthening of the U.S. dollar following Donald Trump’s victory in the U.S. presidential election. Trump’s threats of imposing 100% tariffs on BRICS nations, including India, if they proceed with creating a common currency to rival the USD, have added to investor concerns. In addition, weaker-than-expected GDP data for India’s July-September quarter could trigger further outflows from Indian stocks, exacerbating the pressure on the Rupee.
India’s cautious approach to de-dollarization, despite the U.S. becoming India’s leading trading partner, is also contributing to the currency’s vulnerabilities in the face of global economic shifts.
Markets are now awaiting the U.S. ISM Manufacturing PMI later today, while all eyes will be on the Reserve Bank of India’s (RBI) interest rate decision scheduled for Friday. Analysts from Goldman Sachs expect the RBI to keep the repo rate unchanged, though they anticipate a cautious tone regarding food inflation and the moderation in economic growth.
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