The Indian Rupee (INR) is exhibiting stability during Friday’s trading session in Asia, navigating a landscape influenced by demand for the US Dollar (USD) from foreign banks and local importers. While the Rupee has managed to maintain its position, expected intervention by the Reserve Bank of India (RBI) to counteract dollar sales is helping mitigate significant losses. However, the persistent demand from oil companies and geopolitical tensions are casting a shadow over the currency’s outlook.
As the USD continues to be sought after, particularly by foreign banks, the RBI is reportedly stepping in to support the Rupee by selling dollars near the 86.50 per dollar threshold. Despite this intervention, there has been some movement towards the 86.55 mark. Factors such as uncertainty surrounding US trade policies and geopolitical tension could add pressure to the INR in the short term.
Eyes are keenly set on the upcoming release of US housing data, including metrics like Building Permits and Housing Starts for December. Additionally, the US Industrial Production report is anticipated, which could influence trading dynamics for the INR.
Recent statistics show that India’s trade deficit has decreased to $21.94 billion in December, a significant reduction from November’s $37.84 billion. This improvement was largely due to lower import costs for gold and oil. Meanwhile, US economic indicators, including retail sales and jobless claims, have also shown mixed results that may affect market sentiment.
The USD/INR pair displays a constructive bias, suggesting potential upward movement. However, the Relative Strength Index (RSI) is nearing overbought levels, indicating that the currency pair may experience short-term consolidation or pullback. Key resistance is identified at the all-time high of 86.69, while support levels to watch include 86.30 and 85.85. These indicators will play a critical role in determining the future trajectory of the Indian Rupee.
