Select Language

USD/INR flat lines near all-time low ahead of Indian WPI inflation data

Breaking news

USD/INR flat lines near all-time low ahead of Indian WPI inflation data

  • X
  • facebook
  • LINE
  • RSS

  • X
  • facebook
  • LINE
  • RSS
New update 2024.11.14 11:25
USD/INR flat lines near all-time low ahead of Indian WPI inflation data

update 2024.11.14 11:25

  • The Indian Rupee remains steady near a record low in Thursday's Asian session. 
  • Equity outflows and persistent strength in the USD drag the INR lower. 
  • Investors await India's October WPI Inflation on Thursday ahead of the US PPI data release. 

The Indian Rupee (INR) holds steady near its all-time low on Thursday. The continued withdrawal of foreign funds, sluggishness in domestic stock markets, and a rally in the US Dollar Index (DXY) exert some selling pressure on the local currency. 

Nonetheless, lower crude oil prices and the routine interventions by the Reserve Bank of India (RBI) might help limit the INR's losses and keep volatility muted in the near term. Later on Thursday, investors will monitor India's Wholesale Price Index (WPI) Inflation for October. On the US docket, the Producer Price Index (PPI) for October, weekly Initial Jobless Claims and Fedspeak will be the highlights later in the day. 

Indian Rupee remains weaker amid foreign fund outflows and a strong US Dollar

  • Overseas investors withdrew nearly $3 billion from Indian stocks in November, adding to the $11 billion of outflows in October. Indian equity indexes have fallen over 9% since their peak in late September.
  • The US Consumer Price Index (CPI) rose by 2.6% YoY in October, in line with expectations, according to the US Department of Labor Statistics on Wednesday.
  • The core CPI, which excludes the more volatile food and energy categories, climbed by 3.3% YoY in October, matching prior forecasts.
  • Kansas Fed President Jeffrey Schmid stated on Wednesday that the Fed's interest-rate cuts to date acknowledge its growing confidence that inflation is headed down but gave no steer on how many more rate cuts he feels may be appropriate, per Reuters. 
  • St. Louis Fed President Alberto Musalem noted on Wednesday that sticky inflation figures make it difficult for the US central bank to continue to ease rates. 
  • Dallas Fed President Lorie Logan said on Wednesday that the central bank should move slowly with additional rate cuts to avoid unintentionally stoking inflation. 

USD/INR's bullish outlook remains in play, but overbought conditions linger

The Indian Rupee trades flat on the day. The USD/INR pair holds above the key 100-day Exponential Moving Average (EMA) on the daily timeframe, suggesting the uptrend is more likely to resume than to reverse. However, further consolidation cannot be ruled out before positioning for any near-term USD/INR appreciation as the 14-day Relative Strength Index (RSI) exceeds 70, indicating an overbought condition.

The first upside barrier for USD/INR is seen at 84.50. Sustained trading above this level potentially takes the pair to the 85.00 psychological level and beyond.

On the flip side, the resistance-turned-support level at 84.32 acts as an initial support for the pair. A breach of the mentioned level could see a drop to the 84.05-84.10 region, representing the lower limit of the trend channel and the high of October 11. The next contention level to watch is 83.86, the 100-day EMA. A decisive break below this level could mark the start of a downtrend.

Indian Rupee FAQs

The Indian Rupee (INR) is one of the most sensitive currencies to external factors. The price of Crude Oil (the country is highly dependent on imported Oil), the value of the US Dollar - most trade is conducted in USD - and the level of foreign investment, are all influential. Direct intervention by the Reserve Bank of India (RBI) in FX markets to keep the exchange rate stable, as well as the level of interest rates set by the RBI, are further major influencing factors on the Rupee.

The Reserve Bank of India (RBI) actively intervenes in forex markets to maintain a stable exchange rate, to help facilitate trade. In addition, the RBI tries to maintain the inflation rate at its 4% target by adjusting interest rates. Higher interest rates usually strengthen the Rupee. This is due to the role of the 'carry trade' in which investors borrow in countries with lower interest rates so as to place their money in countries' offering relatively higher interest rates and profit from the difference.

Macroeconomic factors that influence the value of the Rupee include inflation, interest rates, the economic growth rate (GDP), the balance of trade, and inflows from foreign investment. A higher growth rate can lead to more overseas investment, pushing up demand for the Rupee. A less negative balance of trade will eventually lead to a stronger Rupee. Higher interest rates, especially real rates (interest rates less inflation) are also positive for the Rupee. A risk-on environment can lead to greater inflows of Foreign Direct and Indirect Investment (FDI and FII), which also benefit the Rupee.

Higher inflation, particularly, if it is comparatively higher than India's peers, is generally negative for the currency as it reflects devaluation through oversupply. Inflation also increases the cost of exports, leading to more Rupees being sold to purchase foreign imports, which is Rupee-negative. At the same time, higher inflation usually leads to the Reserve Bank of India (RBI) raising interest rates and this can be positive for the Rupee, due to increased demand from international investors. The opposite effect is true of lower inflation.

 

 

 


Date

Created

 : 2024.11.14

Update

Last updated

 : 2024.11.14

Related articles


Show more

FXStreet

Financial media

arrow
FXStreet

FXStreet is a forex information website, delivering market analysis and news articles 24/7.
It features a number of articles contributed by well-known analysts, in addition to the ones by its editorial team.
Founded in 2000 by Francesc Riverola, a Spanish economist, it has grown to become a world-renowned information website.

Was this article helpful?

We hope you find this article useful. Any comments or suggestions will be greatly appreciated.  
We are also looking for writers with extensive experience in forex and crypto to join us.

please contact us at [email protected].

Thank you for your feedback.
Thank you for your feedback.

Most viewed

EUR/GBP Price Analysis: Bearish respite, indicators remain negative

The EUR/GBP pair rose to 0.8320 in Thursday's session. Despite a temporary respite for the bears after recent declines, technical indicators remain deeply negative, with the pair trading below the 20-day Simple Moving Average (SMA) which stands around 0.8340.
New
update2024.11.15 00:52

GBP/USD Price Forecast: Bearish bias pushes Cable below 1.2700

The British Pound posted losses of 0.10% against the US Dollar after US economic data suggested that inflation remains above the Federal Reserve's 2% goal.
New
update2024.11.15 00:05

Silver Price Forecast: XAG/USD finds support near $29.70 as US Dollar gives up some intraday gains

Silver price (XAG/USD) discovers a temporary support near $29.70 in Thursday's North American session.
New
update2024.11.14 23:47

USD/JPY Price Prediction: Possible Broadening Formation with bearish potential

USD/JPY could be overshooting the upper boundary line of a Broadening Formation (BF) price pattern that looks like it has been forming over the last three weeks.
New
update2024.11.14 23:46

Gold trades like the new Bitcoin - TDS

The cards were set well before election night, with evidence overwhelmingly suggesting the melt-up in Gold was underscored by a liquidity vacuum, with the US election being the focal point, TDS' Senior Commodity Strategist Daniel Ghali notes.
New
update2024.11.14 23:38

Fed's Barkin: The biggest risk to growth is probably the unemployment rate

Richmond Fed President Thomas Barkin noted that while the Fed has made strong progress so far, there's still more work to be done to keep the momentum going.
New
update2024.11.14 23:34

BoE Mann favours keeping rates on hold

Bank of England policymaker Catherine Mann argued that the central bank should maintain interest rates at their current level until the upside risks to inflation, including those stemming from the election of Donald Trump as the next US president, subside.
New
update2024.11.14 23:12

Crude Oil under pressure after monthly IEA report

Crude Oil steadies and consolidates recent losses after the International Energy Agency (IEA) released its monthly report for November on Thursday.
New
update2024.11.14 22:40

US: Initial Jobless Claims rose to 217K last week

US citizens filing new applications for unemployment insurance rose to 217K for the week ending November 8, as reported by the US Department of Labor (DoL) on Thursday.
New
update2024.11.14 22:40

US: Headline Producer Prices rose by 2.4% YoY in October

The Bureau of Labor Statistics (BLS) reported a 2.4% increase in the headline Producer Price Index (PPI) in October, surpassing expectations.
New
update2024.11.14 22:34

Disclaimer:arw

All information and content provided on this website is provided for informational purposes only and is not intended to solicit any investment. Although all efforts are made in order to ensure that the information is correct, no guarantee is provided for the accuracy of any content on this website. Any decision made shall be the responsibility of the investor and Myforex does not take any responsibility whatsoever regarding the use of any information provided herein.

The content provided on this website belongs to Myforex and, where stated, the relevant licensors. All rights are reserved by Myforex and the relevant licensors, and no content of this website, whether in full or in part, shall be copied or displayed elsewhere without the explicit written permission of the relevant copyright holder. If you wish to use any part of the content provided on this website, please ensure that you contact Myforex.

  • Facebook
  • Twitter
  • LINE

Myforex uses cookies to improve the convenience and functionality of this website. This website may include cookies not only by us but also by third parties (advertisers, log analysts, etc.) for the purpose of tracking the activities of users. Cookie policy

I agree
share
Share
Cancel