The Indian Rupee (INR) is experiencing significant pressure in the Asian market on Monday, following its decline to a record low of 81.00 against the US Dollar (USD). A stronger USD, influenced by month-end demand and concerns linked to the trade policies of Donald Trump, coupled with issues in India’s economy such as a slowing growth rate and an expanding trade deficit, are contributing to this downward trend. The Reserve Bank of India (RBI) may step in to sell USD in a bid to stabilize the Rupee and mitigate further depreciation in the near term. However, trading is expected to remain subdued as the year-end approaches, creating a potentially range-bound market.
Market participants are particularly focused on the upcoming release of India’s Fiscal Deficit figures, expected later on Monday. Additionally, the Indian Trade Deficit for the third quarter and November’s Infrastructure Output data will be pivotal as they are set to be published on Tuesday. The prevailing economic conditions suggest a potential growth rate of around 6.5% for India in the upcoming fiscal year, which aligns closely with the lower end of official expectations.
The outlook for the USD/INR currency pair remains bullish despite recent fluctuations. Current trading suggests the USD/INR pair is above the significant 100-day Exponential Moving Average (EMA), indicating that bullish sentiments still prevail in the medium term. However, the market may experience further consolidation before any significant appreciation of the Rupee occurs. Currently, the 14-day Relative Strength Index (RSI) indicates an overbought condition at around 76.10. If the USD manages to surpass the upper boundary of its ascending channel at 85.35 and maintains this position, it could entice technical buyers, pushing the rate toward 85.50 and potentially reaching the psychological level of 86.00. Conversely, a bearish trend may see the pair retreat to critical support around the 85.10 – 85.00 zone, with a breach potentially leading to a decline toward the 100-day EMA at 84.30.
