The Indian Rupee (INR) has been trading in negative territory for the past few days due to a combination of factors such as a stronger US Dollar (USD), hawkish comments from the US Federal Reserve, and overall caution among investors. The upcoming India’s Q4 GDP data and US Core PCE inflation data are set to be released this week and will be closely monitored by market participants.
Foreign investors pulled out $2.8 billion from Indian equities in May, citing concerns over the upcoming election. The benchmark Indian equity indices, BSE Sensex and Nifty 50, experienced a slight decline after reaching new highs. India’s GDP growth for the March quarter is expected to be below 7%, compared to the previous quarter. The International Monetary Fund (IMF) and Nomura forecast a 7% growth for India’s GDP in 2024.
The technical analysis of the USD/INR pair shows a bearish stance on the daily chart, with the pair holding below the key 100-day Exponential Moving Average (EMA). The downward momentum is supported by the 14-day Relative Strength Index (RSI) in bearish territory. The key levels to watch for are the resistance level at 83.20 and the support level at 83.00. A break above the resistance could lead to further upside momentum, while a breach below the support could signal a downward trend.
The US Dollar price today shows slight changes against major currencies, with the USD being the strongest against the Canadian Dollar. The heat map displays the percentage changes of major currencies against each other, providing a visual representation of the relative strength of the US Dollar.
The Indian Rupee is influenced by various external factors such as the price of Crude Oil, the value of the US Dollar, and levels of foreign investment. The Reserve Bank of India (RBI) actively intervenes in FX markets to maintain stability in the exchange rate, while also adjusting interest rates to manage inflation. Macroeconomic factors like inflation, interest rates, GDP growth rate, balance of trade, and foreign investment inflows also play a significant role in determining the value of the Rupee. Higher inflation can have a negative impact on the currency, while higher interest rates and a positive trade balance are generally favorable for the Rupee.
