The Indian Rupee (INR) has shown stability during Thursday’s Asian trading session, amid ongoing demand for the US dollar (USD) and a cautious stance from American central bank officials. Recent economic indicators, such as weekly Initial Jobless Claims, Existing Home Sales data, and final adjustments to the third quarter GDP figures, are anticipated later today, adding to the economic landscape.
The INR remains flat as renewed demand for the USD stems from importers and foreign banks, alongside capital outflows from foreign investments and a lackluster performance in domestic stock markets. The Federal Reserve’s recent decision to lower interest rates by 25 basis points has further reinforced the dollar’s strength against the rupee. Despite these pressures, there is some expectation that the Reserve Bank of India (RBI) may step in to curb excessive volatility in the currency market.
Following the Fed’s announcement, reports emerged suggesting that a surge in gold imports had inaccurately widened India’s trade deficit, which impacted the rupee negatively. While there are challenges due to heightened dollar demand from foreign clients, analysts note that the INR is demonstrating resilience compared to other currencies, with its depreciation appearing gradual. The sentiment is that the rupee may trade within a limited range, with the level around 85 against the dollar seen as a crucial support point.
Market trends indicate that the USD/INR pair remains in a strong uptrend. The price action holds above the significant 100-day Exponential Moving Average (EMA), suggesting an overall bullish momentum. A rise above the psychological barrier of 85.00 could initiate a rally towards higher targets. Conversely, initial support is observed at 84.82, and a drop below this mark would lead to further declines potentially reaching 84.22, marking the November low. Continued bearish movements could see the rupee decline to the 100-day EMA level at 84.16.
