The Indian Rupee (INR) remained stable during Monday’s Asian trading session, despite pressures from foreign fund outflows and recent dynamics in global markets. The USD experienced a modest decline, yet ongoing demand for the Greenback, alongside a weakening Chinese Yuan, is expected to exert downward pressure on the Indian currency in the near term.
The Reserve Bank of India (RBI) has been actively intervening in the foreign exchange market by selling US dollars to mitigate potential losses for the INR. However, this approach has led to a decrease in India’s foreign exchange reserves. Without any significant economic data releases from either India or the US on Monday, market participants are keenly awaiting remarks from US Federal Reserve officials, particularly Austan Goolsbee.
Market projections indicate that the INR may stabilize around 84.5 per US Dollar by the end of December, as per a recent forecast. Meanwhile, Moody’s Ratings has projected a robust growth rate of 7.2% for the Indian economy in 2024, attributing this growth to a rebound in household spending and diminishing inflationary pressures. The agency also forecasts growth rates of 6.6% and 6.5% for 2025 and 2026, respectively.
Analysts have expressed concerns regarding the outlook for Asian currencies, noting that potential US tariff increases could negatively impact economic performance in the region. This sentiment highlights the risky market environment for the Indian Rupee.
Recent US retail sales data revealed a 0.4% increase in October, surpassing earlier expectations. In the wake of this, Fed officials have indicated a cautious approach to interest rate adjustments, suggesting a preference for stability. Currently, the market anticipates a nearly 60% chance of a modest rate cut at the upcoming December meeting.
Despite the Indian Rupee’s flat performance recently, the longer-term trend for the USD/INR exchange rate remains bullish, underpinned by sustained trading above the critical 100-day Exponential Moving Average. However, technical indicators suggest that the currency pair may experience further consolidation before any significant appreciation occurs. Key resistance levels are identified at 84.50 and 85.00, while initial support is seen at 84.35. Should these levels fail, sellers could drive the price down towards thresholds around 84.00 and 83.88.
