The Indian Rupee (INR) showed signs of resilience during Thursday’s trading session in Asia, although it faces pressure from increased demand for the US Dollar (USD) as the month draws to a close. High USD bids driven by month-end payments, coupled with concerns regarding trade policies under the Trump administration, pose challenges for the INR. Nevertheless, the Reserve Bank of India (RBI) may intervene in the foreign exchange market to support the INR and restrict any significant gains for the USD against the local currency.
Despite a slight uptick in the value of the INR, the ongoing demand for USD from importers creates downward pressure. Speculation around potential aggressive trade policies and expectations that the Federal Reserve may take a cautious stance on further interest rate reductions could contribute to a stronger USD in the near future. With US markets closed for the Thanksgiving holiday, traders are closely watching upcoming economic indicators from India, including data on the Federal Fiscal Deficit for October and GDP growth figures for Q2 FY25, due to be released on Friday.
Recent economic data from the US reveals a rise in inflation, as indicated by the Personal Consumption Expenditures (PCE) Price Index, which increased to 2.3% year-over-year in October. Moreover, the core PCE Price Index also showed a moderate increase, suggesting that inflation is aligning with market expectations. The US economy experienced a growth rate of 2.8% annually from July to September, reinforcing trader speculation about the Federal Reserve’s upcoming rate decisions.
The USD/INR pair continues on an upward trend, remaining above the critical 100-day Exponential Moving Average (EMA). Currently, the resistance level is positioned around 84.50-84.55, which represents the upper boundary of an ascending trend channel. Should the USD surpass this level, it may attract further buying interest, pushing prices towards the psychological threshold of 85. Conversely, should the INR rally and maintain momentum, a decline below the 84.24 level would indicate bearish sentiment, with subsequent support levels identified at 83.95 and 83.65.
