The Indian Rupee has experienced a slight decline during Thursday’s trading session in Asia, influenced by ongoing selling pressure from foreign portfolio investors in Indian equities. The stronger US Dollar is also contributing to these losses, as demand for USD from foreign banks and importers further exacerbates the situation for the local currency.
Despite the currency’s struggles, there is some support for the Rupee from a recent decrease in crude oil prices, thanks to diminishing concerns about supply disruptions in the Middle East. As India ranks as the world’s third-largest oil consumer, this drop could have positive implications for the INR. Additionally, the Reserve Bank of India’s routine foreign exchange interventions may help to cushion the currency against further declines.
Market participants are particularly focused on the upcoming US Retail Sales data for September, expected later today. In conjunction with this, the release of US weekly Initial Jobless Claims, Industrial Production figures, and the Philadelphia Fed Manufacturing Survey is also anticipated.
Recent statistics reveal that India’s trade deficit for September was recorded at $20.78 billion, a decrease from $29.65 billion in August. Exports saw a minor increase to $34.58 billion year-on-year, while imports fell to $55.36 billion, down from previous levels. Notably, foreign investors have pulled out over $7 billion from Indian equity markets since the beginning of October, marking the largest exit in over four years.
Looking ahead, the US Retail Sales are projected to increase by 0.3% for September, up from the previous figure of 0.1%. Market analysts are also indicating a high probability of a 25 basis points cut in the Federal Reserve’s interest rates during the upcoming November meeting, reflecting traders’ expectations.
The technical outlook for the Indian Rupee remains somewhat bullish, with the USD/INR currency pair maintaining its position above significant support levels. Continuous trading above the historical high of 84.15 could see the pair approach the 84.50 level, with the psychological threshold of 85.00 looming ahead. Conversely, if bearish trends emerge, levels of 83.90 and 83.70 could come into play, as traders monitor market movements closely.
