The Indian Rupee (INR) faced downward pressure during Monday’s Asian trading session, largely influenced by increased demand for the US Dollar (USD) as month-end approaches and anticipated interventions from the Reserve Bank of India (RBI). Importers’ heightened purchases of USD have contributed to the rupee’s decline, although inflows of foreign investment and a dip in crude oil prices may help mitigate the depreciation.
Market participants are closely watching for insights from the Federal Reserve Governor’s speech, as it could provide important context regarding the trajectory of US interest rates. In addition, key economic indicators are slated for release, including the Chicago Purchasing Managers’ Index and the Dallas Fed Manufacturing Business Index. Domestically, the Federal Fiscal Deficit data for August will also be revealed, further shaping economic narratives.
Throughout the current calendar year, the Indian Rupee has maintained relative stability against the USD, showing a marginal drop of just 0.59% so far. Recent commentary from government economic advisors suggests that India’s economy is projected to grow between 6.5% and 7% in this financial year, reflecting a robust outlook.
In the United States, the latest figures on consumer spending have indicated a year-on-year increase in the Personal Consumption Expenditures (PCE) Price Index of 2.2% for August, a slight deceleration compared to 2.5% in July. The core PCE, which omits food and energy, rose 2.7% year-on-year. These figures align with market expectations and suggest a steady inflationary environment. Additionally, a rise in consumer sentiment in September further complements the economic landscape, with the index increasing from 66.0 in August to 70.1.
From a technical perspective, the Indian Rupee is trading under some strain. The USD/INR pair remains above the significant 100-day Exponential Moving Average (EMA), indicating ongoing constructive bias. However, the Relative Strength Index (RSI) suggests potential for further downside, with immediate resistance set at 83.75, while significant support is identified at 83.62. A breach below this support could lead to a decline towards 83.00, representing another key psychological level.
