The Indian Rupee (INR) showed signs of recovery during Monday’s Asian trading session, having recently dipped to an all-time low. Factors contributing to this downturn included rising oil prices amidst escalating geopolitical tensions and significant foreign investor sell-offs in the Indian equity market. The demand for the US dollar from foreign banks further pressured the local currency. However, potential intervention by the Reserve Bank of India (RBI), particularly through US dollar sales by state-run banks, may provide some support to the INR.
On Monday, traders are particularly focused on India’s Wholesale Price Index (WPI) inflation data, which is anticipated to increase to 1.90% year-on-year for September, up from 1.31% in August. This data could influence market sentiment and the INR’s trajectory. Simultaneously, the United States will release its NY Empire State Manufacturing Index for October, which could have implications for global markets.
As the INR fell below the 84 level against the US dollar, concerns about foreign bank demands were heightened alongside increasing crude oil prices, all contributing to the currency’s weakness. In the United States, the Producer Price Index (PPI) showed an annual growth of 1.8% in September, surpassing the expected 1.6%, while the core PPI also exceeded projections. Consumer sentiment in the US, measured by the University of Michigan, showed a decline, which could impact potential Federal Reserve actions.
Despite these challenges, the Indian Rupee remained in positive territory during the session, with the USD/INR pair sustaining an upward trend above key technical levels. The initial resistance for the pair stands near the historical high of 84.15, with further upward movement potentially extending towards 84.50. Conversely, if the pair were to breach the support level at 83.90, it could lead to further declines towards the 100-day Exponential Moving Average around 83.69, with the critical psychological level of 83.00 serving as a next support target.
