The Indian Rupee (INR) is showing relative stability during Monday’s session in Asia, following a recent dip that brought it to a historical low. Factors influencing the rupee’s performance include a weakening Chinese Yuan, strong ongoing demand for the US Dollar, and looming tariff threats from the upcoming US administration. The Reserve Bank of India (RBI) is anticipated to intervene by selling US Dollars to support the INR and curb its depreciation.
As traders anticipate the release of PMI data for December, the sentiments surrounding the INR remain mixed. Global market developments, particularly with regards to US economic policies, are a vital aspect for investors. Projections indicate that the Indian Rupee may experience slight declines in 2025, driven by fluctuations in foreign portfolio investments and a potentially robust US Dollar.
Recent data from the US shows that the Manufacturing PMI rose to 49.3 in December, up from 48.4 in the prior month — a figure that exceeded market expectations. Comments from several Federal Reserve officials indicate ongoing concerns about inflation, which remains above the target rate of 2%. This poses challenges for monetary policy as the central bank strives to stabilize price levels.
From a technical analysis standpoint, the INR has maintained a flat trajectory. Observations reveal that the USD/INR pair has recently breached an ascending trend channel, positioning the currency above the significant 100-day Exponential Moving Average (EMA). Despite this bullish outlook, indicators suggest that the market is entering an overbought territory, signaling potential consolidation before any further appreciation of the USD/INR.
Looking at key levels, the record high of 85.81 serves as a critical resistance point that bulls will need to surpass. Should this level be broken decisively, it could signal a rally towards the psychological barrier of 86.00. Conversely, the support level established at 85.55 must hold to prevent a decline that could push the INR down to 85.00 and potentially lower towards 84.43, reflecting the 100-day EMA.
