The Indian Rupee is facing significant downward pressure during today’s Asian trading session, primarily driven by strong demand for the US Dollar. Month-end purchasing by importers and ongoing demand from foreign investors and companies reliant on oil have contributed to the currency’s decline, bringing it close to historic lows. The Reserve Bank of India is anticipated to intervene in the foreign exchange market to stabilize the rupee and mitigate further depreciation.
Today’s trading sentiment is characterized by reduced volumes as many investors await the upcoming New Year holiday, and a preliminary report on the US Goods Trade Balance is set to be released later. According to projections from the finance ministry, India’s economy is expected to grow approximately 6.5% in the fiscal year 2024/25, leaning toward the lower end of its growth target range.
Recent data indicates that Foreign Institutional Investors have been net sellers in the Indian capital markets, shedding shares worth ₹2,454.21 crore. The current landscape of economic indicators points to challenges for the rupee, including weakened foreign direct investment flows and subdued manufacturing export growth. A report by a leading bank anticipates a moderate depreciation of the rupee, suggesting it may reach 85.5 per US Dollar over the next year.
On the US economic front, initial jobless claims have dropped slightly, indicating a slowdown in unemployment claims. This data could impact the markets, as it fell below the anticipated figures.
Overall, the Indian Rupee remains weak. Technically, analysis shows a strong upward trend, supported above the key 100-day Exponential Moving Average. However, an overbought condition indicated by the Relative Strength Index suggests some potential for consolidation before any short-term appreciation against the US Dollar. Key resistance is identified at 85.35, while a significant support level is observed in the 85.05-85.00 range, with breaking below that indicating further downside potential.
