- The Indian Rupee is losing ground during the early European session on Friday.
- Foreign outflows and rising crude oil prices are putting pressure on the INR, although potential intervention from the RBI may help limit its decline.
- Key highlights for Friday include the US Producer Price Index (PPI) and the preliminary reading of the Michigan Consumer Sentiment Index.
The Indian Rupee (INR) is weakening on Friday against a stronger US Dollar (USD). This decline is compounded by persistent outflows of foreign funds from India and elevated crude oil prices, which continue to pressure the local currency. The recent US inflation data, which came in hotter than expected, along with hawkish remarks from Federal Reserve officials, has lifted the Greenback, further contributing to the INR's downward trend.
However, potential foreign exchange intervention from the Reserve Bank of India (RBI) may help mitigate the losses of the INR. Looking ahead, market participants will focus on the US Producer Price Index (PPI) for September and the preliminary reading of the Michigan Consumer Sentiment Index for October. In India, the Industrial Production and Manufacturing Output figures will be released on Friday.
Daily Digest Market Movers: Indian Rupee Faces Multiple Headwinds
- FTSE Russell announced on Tuesday that Indian sovereign bonds will be included in its Emerging Markets Government Bond Index (EMGBI), following similar actions by JP Morgan and Bloomberg Index Services.
- In September, the US Consumer Price Index (CPI) rose by 2.4% year-over-year, slightly lower than August's 2.5% but above the anticipated 2.3%. The Core CPI also increased, climbing 3.3% year-over-year in September, exceeding both forecasts and August's figure of 3.2%.
- New York Fed President John C. Williams stated on Thursday that monetary policy is shifting towards a more neutral stance, reflecting ongoing progress toward price stability.
- Meanwhile, Chicago Fed President Austan Goolsbee expressed that he is not overly worried about the higher-than-expected inflation report for September and believes the Fed has moved beyond a singular focus on price pressures.
- Atlanta Fed President Raphael Bostic noted that the Fed could maintain its current stance at an upcoming policy meeting if the data supports such a decision, stating, "I am totally comfortable with skipping a meeting if the data suggests that's appropriate."
Technical Analysis: USD/INR Maintains Bullish Trend in the Long Term
The Indian Rupee is trading weaker today. The USD/INR pair retains a constructive outlook, holding above the descending trend line and the key 100-day Exponential Moving Average (EMA) on the daily chart. The upward momentum is bolstered by the 14-day Relative Strength Index (RSI), which is positioned above the midline at around 59.15, indicating support for buyers in the near term.
The psychological level of 84.00 acts as a significant resistance point for USD/INR. A decisive breakout above this level could pave the way to the all-time high of 84.15, potentially moving toward 84.50.
On the downside, initial support is seen near the former resistance-turned-support level at 83.90, with further contention around the 100-day EMA at 83.68. Additionally, the round figure of 83.00, which represents the low from May 24, serves as another important downside threshold to monitor.
