The Indian Rupee (INR) is maintaining a stable position during the Monday morning trading session in Asia, benefiting from recent economic factors. Notably, a decrease in crude oil prices and strong foreign institutional investments are contributing to the rupee’s firm stance. Additionally, expectations of a Federal Reserve interest rate cut add to the supportive environment for the INR. However, the rupee’s momentum is tempered by ongoing U.S. dollar purchases from importers and heightened market risk aversion ahead of significant economic releases.
As market participants await the Indian Trade Balance and the U.S. NY Empire State Manufacturing Index scheduled for release later today, anticipation is building for further indicators of economic performance. On the horizon, the Indian Wholesale Price Index (WPI) inflation figures and U.S. retail sales data for August will be published tomorrow, with the Federal Reserve’s interest rate decision taking center stage on Wednesday.
In the previous trading session, Indian stock indices experienced a slight decline. The BSE Sensex fell by 72 points and the NSE Nifty decreased by 32 points. There was notable performance from stocks such as Bajaj Finserv, Axis Bank, and Wipro, which stood out as top gainers in the market.
Interestingly, the U.S. dollar index has dropped significantly over the past quarter, from around 106 to approximately 101, while Asian currencies have seen a parallel appreciation. Despite these favorable conditions, the Indian Rupee has not strengthened against the dollar, reflecting ongoing challenges for the local currency.
In the context of interest rate decisions, market expectations now suggest a 48% likelihood of a 25 basis points cut by the U.S. Federal Reserve this week, while a larger 50 basis point cut is slightly more probable at 52%.
Looking at technical indicators, the USD/INR exchange rate remains stable, although it has lost ground beneath previous upward trends. The focus shifts to potential resistance levels around 84.00 – 84.05, while initial support is seen at 83.84, with a break below that threshold leading to further declines.
