The Indian Rupee (INR) is experiencing a modest appreciation during Monday’s trading session in Asia, buoyed by strong inflows of foreign investments into Indian equity markets. This uptick in the currency comes against a backdrop of rising crude oil prices and increased demand for the US Dollar (USD) from importers, which may limit the potential for further gains.
The financial community is keenly awaiting the release of the flash Purchasing Managers Index (PMI) for the US, scheduled for later today. Additionally, speeches from key Federal Reserve officials are anticipated to provide insights into monetary policy directions. Should the economic indicators from the US reveal any weakness or if the Fed officials suggest a more cautious approach to interest rates, the USD may weaken, thereby extending support for the INR.
Recent data reveals a significant bolstering of India’s foreign exchange reserves, which have reached a record high of approximately USD 689.458 billion, marking an increase of $223 million. Furthermore, the manufacturing PMI in India, which saw a slight reduction to 56.7 in September from 57.5, indicates ongoing yet moderating economic activity. Analysts project that India could emerge as the world’s third-largest economy by 2030-2031, with an estimated annual growth rate of 6.7%.
While the INR shows signs of strengthening, technical analysis suggests that the USD/INR currency pair is in an oversold condition. The immediate resistance level is identified at the 100-day Exponential Moving Average (EMA) at 83.62, while a psychological barrier is noted at 84.00. Conversely, initial support can be found at the June low of 83.30, with potential declines extending towards the 83.00 level. However, traders are advised to monitor market trends closely for potential consolidation before making any significant positioning decisions.
