The Indian Rupee (INR) continues to struggle in the Asian trading session as it faces pressure from robust demand for the US Dollar (USD) and significant outflows from foreign institutional investors. Adding to the currency’s woes, the INR hit a new all-time low in the previous session. Market participants are awaiting the release of the US Consumer Price Index (CPI) data for October, which is anticipated to provide fresh direction for currency trading.
The ongoing strength of the USD, coupled with substantial withdrawals from local markets, has exerted downward pressure on the Indian currency. Nonetheless, analysts believe that the Reserve Bank of India (RBI) may implement interventions to stabilize the INR by selling USD. On this day, traders are particularly focused on monitoring U.S. inflation data and remarks from various Federal Reserve officials, which could influence further movements in the currency market.
Recent inflation data from India has indicated a rise in retail inflation, reaching a 14-month high of 6.21% year-on-year in October, surpassing previous estimates. Food inflation has also experienced a notable increase, reflecting growing concern over rising prices. In the industrial sector, Indian production showed growth of 3.1% year-on-year for September, better than forecasts, indicating potential resilience in economic activity despite external pressures.
Foreign investors have withdrawn nearly $3 billion from Indian equities this month, compounding a substantial $11 billion pulled out in October, further intensifying the negative sentiment towards the INR.
Market analysis suggests the USD/INR pair may remain constructive, maintaining a position above the key 100-day Exponential Moving Average. However, the 14-day Relative Strength Index indicates an overbought condition, signaling that a period of consolidation might be needed before any significant upward movement can be expected. Key resistance for USD/INR is identified at 84.50, while a drop below 84.30 could expose lower levels, including the crucial 100-day EMA at 83.85.
