During Monday’s trading session in Asia, the Indian Rupee (INR) demonstrated a modest gain against the US Dollar (USD), buoyed by a weakening USD amid the uncertainties surrounding the upcoming US presidential election. The decline in the USD has prompted an unwinding of long positions. However, ongoing concerns regarding foreign capital outflows and climbing crude oil prices may limit substantial gains for the INR in the short term.
This week, all eyes are on the US presidential elections and the Federal Reserve’s interest rate decisions, both of which are expected to influence market volatility. The Federal Reserve is projected to implement a rate cut of 25 basis points during its November meeting. Additionally, investors are keenly awaiting the release of the HSBC Manufacturing Purchasing Managers’ Index (PMI) for India, which is scheduled for later on Monday.
Market analysts anticipate that the Indian Rupee will largely trade within a narrow range against the USD over the following year. This is attributed to the Reserve Bank of India’s (RBI) consistent interventions aimed at stabilizing the currency by dipping into foreign exchange reserves. An economist pointed out that this intervention strategy has been a long-standing practice since the post-pandemic period.
In the United States, employment data revealed that Nonfarm Payrolls increased by 12,000 in October, a significant drop compared to the previous month’s adjusted gain of 223,000. This figure fell short of market expectations, while the Unemployment Rate remained steady at 4.1%.
Despite the Indian Rupee experiencing a slight downturn, the overall outlook against the USD remains positive, with momentum upheld above the significant 100-day Exponential Moving Average (EMA). Resistance for the USD/INR pair is observed at the upper boundary of an ascending trend channel around 84.24, while the lower limit sits near 84.05, which, if breached, could lead towards the 83.78 level.
