- The Indian Rupee remains stable in Monday’s Asian session.
- A mix of declining crude oil prices, strong foreign investments, and heightened expectations of a Fed rate hike supports the INR.
- Investors are awaiting the release of India's Trade Balance and the US NY Empire State Manufacturing Index, both set for Monday.
The Indian Rupee (INR) remains steady on Monday, despite a weaker US Dollar (USD). Factors such as declining crude oil prices, strong foreign institutional inflows (FII) into the Indian stock market, and rising expectations of a significant Federal Reserve (Fed) rate cut in its upcoming monetary policy meeting on Wednesday could provide support for the INR.
However, continued USD buying by importers and risk aversion ahead of this key event may strengthen the Greenback. Looking ahead, India’s Trade Balance and the US NY Empire State Manufacturing Index are set for release on Monday. The Indian Wholesale Price Index (WPI) Inflation and US Retail Sales data for August will follow on Tuesday, with the US Federal Reserve's interest rate decision as the highlight on Wednesday.
Daily Market Digest: Indian Rupee Flat Despite Softer USD and Lower Crude Prices
- On Friday, the BSE Sensex fell by 72 points (0.1%), while the NSE Nifty dropped by 32 points (0.1%). Bajaj Finserv, Axis Bank, and Wipro were among the top gainers.
- "The US Dollar Index has declined from 106 to around 101 over the past three months, while Asian currencies have appreciated against the greenback. Expectations of US Fed interest rate cuts, a sharp drop in crude oil prices, and consistent foreign institutional inflows into Indian stock markets are positive factors for the rupee. However, the local currency remains weak against the US dollar instead of appreciating," said Amit Pabari, MD, CR Forex Advisors.
- The Reserve Bank of India Governor Shaktikanta Das projected the country’s growth rate over the next few years at 7.5%, with potential upside.
- The University of Michigan Consumer Sentiment Index rose to 69.0 in September, up from 67.9 in August, surpassing the forecast of 68.0.
- Markets are now pricing in a 48% chance of a 25 basis point (bps) US rate cut on September 17-18, with a 52% probability of a 50 bps cut, according to the CME FedWatch tool.
Technical Analysis: USD/INR’s Constructive Outlook Remains Intact
The Indian Rupee weakens slightly as the USD/INR pair breaks below an ascending triangle on the daily chart. Despite this, the long-term bullish outlook remains intact, with the pair holding above the key 100-day Exponential Moving Average (EMA). Further consolidation is possible, as the 14-day Relative Strength Index (RSI) hovers near the midline, reflecting neutral momentum.
A sustained push above the 84.00-84.05 region, which aligns with the psychological level, the triangle's upper boundary, and the September 11 high, could propel USD/INR toward the next resistance at 84.50.
On the downside, initial support is at 83.84, the low from August 30. A break below this level could open the door to the 100-day EMA at 83.68.
