During the Asian trading session on Friday, the Indian Rupee (INR) depreciated slightly, influenced by persistent foreign outflows and rising global crude oil prices. The strengthening of the US Dollar, driven by stronger-than-expected inflation data and signals of a hawkish stance from the Federal Reserve officials, further exacerbated the pressure on the INR. However, potential interventions by the Reserve Bank of India (RBI) are expected to help stabilize the currency.
Market participants are now looking to key economic indicators being released today, particularly the US Producer Price Index (PPI) for September and the preliminary Michigan Consumer Sentiment Index for October. In India, attention will also be on the upcoming reports concerning Industrial Production and Manufacturing Output, which may influence economic outlook discussions.
The Indian currency has been navigating through a challenging environment, particularly in light of recent developments regarding the inclusion of Indian sovereign bonds into major emerging market indices, a move that could attract foreign investment. Reports from market service providers have noted this inclusion, which follows similar actions by other notable financial institutions.
The recent US Consumer Price Index (CPI) indicated an annual increase of 2.4% for September, slightly below August’s figure but above analysts’ expectations. Discussions from Federal Reserve officials suggested a shift towards a more balanced monetary policy, with movements indicating a focus not solely on inflationary pressures.
From a technical perspective, the USD/INR pair maintains a positive trajectory in the longer term. The currency pair has remained above the descending trend line and a critical moving average, supported by favorable momentum indicators. Key resistance levels are identified at 84.00, with a breach above this threshold potentially paving the way to new highs. Conversely, support levels are observed around 83.90 and further at 83.68, indicating areas to monitor for any significant downward moves.
