The Indian Rupee (INR) is exhibiting positive movement in the Asian trading session on Monday, gaining strength from anticipated inflows linked to MSCI’s index rebalancing. This rebalancing is poised to channel approximately $2.5 billion into Indian equities, potentially boosting the currency’s performance. However, ongoing foreign portfolio outflows and a resurgent US Dollar (USD) may limit the INR’s gains.
In addition to the positive market sentiment from MSCI’s activities, traders are closely monitoring key economic indicators set to be released later today, including the US Chicago Fed National Activity Index and the Dallas Fed Manufacturing Business Index. These reports could provide critical insight into the health of the US economy, especially as the week progresses, where focus will also shift to the Core Personal Consumption Expenditures (PCE) Price Index and the preliminary Gross Domestic Product (GDP) for the third quarter.
Recent data reflects a mixed manufacturing and services landscape in India. While the HSBC Flash India Composite Output Index rose to 59.5 in November, the Manufacturing PMI saw a slight decrease to 57.3. In contrast, the Services PMI demonstrated resilience, increasing to 59.2. This suggests that, although price pressures are mounting, particularly in raw materials and service-related costs, the overall economic outlook remains relatively strong.
From a technical standpoint, the USD/INR currency pair remains within an ascending trend channel, suggesting a favorable long-term outlook despite the current fluctuations. The INR’s performance is currently supported above the 100-day Exponential Moving Average (EMA), indicating potential for further appreciation. Key resistance is noted at an all-time high of 84.52, with the psychological threshold of 85.00 serving as a critical target. Conversely, any pullback below 84.35 could signal a decline towards the lower range of 84.00 – 83.90, warranting close attention from traders and market analysts alike.
