The Indian Rupee (INR) maintained its position during Monday’s Asian trading session, buoyed by robust foreign inflows and a dip in crude oil prices. This positive momentum was evident as the INR had recently reached its highest level since mid-July. Factors contributing to this stability include recent actions by the Federal Reserve, which has implemented rate cuts, alongside significant portfolio investments flowing into Indian markets. As India ranks as the third-largest oil consumer globally, any decrease in oil prices is expected to further support the domestic currency.
Despite this strength, demand for US Dollar (USD) from local oil companies could potentially curtail the INR’s upward trajectory. Traders are awaiting the US Consumer Confidence figures for September, which could provide additional context to market movements. Moreover, Federal Reserve Governor Michelle Bowman’s upcoming speech is also being closely monitored for insights into future monetary policy.
On the economic front, the flash readings for India’s Manufacturing and Services Purchasing Managers Indices (PMI) indicated a slowdown. The Manufacturing PMI fell to 56.7 in September from 57.5, while the Services PMI dropped to 58.9 from the previous reading of 60.9. This trend suggests a more cautious economic environment, as highlighted by economic analysts.
Across the Atlantic, the US Manufacturing PMI experienced a decline, recording a 15-month low of 47.0 in September, which was below analysts’ expectations. The Services PMI also showed a slight easing, settling at 55.4, indicating ongoing fluctuations in economic activity.
Currently, the USD/INR pair is exhibiting a bearish trend, remaining below the significant 100-day Exponential Moving Average (EMA). The immediate resistance for this currency pair is positioned at 83.68, while the initial support level stands at 83.30, with further downside potential around the 83.00 level. As market participants navigate these dynamics, the INR’s trajectory will remain closely watched in the coming sessions.
