The Indian Rupee (INR) is experiencing a bearish trend during the Asian session on Friday, primarily influenced by heightened demand for US Dollars (USD) from importers. This depreciation has pushed the Rupee down to alarming levels, although interventions from the Reserve Bank of India (RBI) are expected to limit further declines. Market attention is particularly focused on the upcoming US employment report as traders brace for potential repercussions.
On Friday, the Indian Rupee extended its losses after previously hitting its record closing low. Traders are on the lookout for any actions from the RBI, which intervened in the past to curb depreciation when the Rupee slipped below the significant 84 level. The sustained demand for USD driven by oil importers, alongside increased capital inflows, adds additional pressure on the local currency.
All eyes are now on the US employment figures slated for release later in the day, which will include key metrics like Nonfarm Payrolls, the Unemployment Rate, and Average Hourly Earnings. A weaker labor market could catalyze expectations for a more aggressive rate cut by the Federal Reserve, potentially reducing the strength of the Greenback and making the Indian Rupee a more appealing choice for investors.
In conjunction with the employment report, recent data showcased a modest increase in private sector employment and a rise in annual compensation. Simultaneously, initial jobless claims in the US showed slight improvement, falling below projections. This mixed bag of economic indicators signals the complexity of the current labor market and may influence Fed policies moving forward.
From a technical perspective, the USD/INR currency pair appears to be on an upward trajectory, constrained within a generally bullish channel. Maintaining trade above the 84.00-84.05 range is crucial for potential upside movements toward 84.50. Conversely, failure to hold above this support level could drag the pair down towards critical support zones, indicating significant volatility ahead.
