- The Indian Rupee hovers near all-time lows, pressured by foreign selling in Indian equities.
- PM Modi is set to meet with Chinese President Xi Jinping during the BRICS Summit.
- The Indian Rupee could stabilize if the RBI intervenes by selling US Dollars.
The Indian Rupee (INR) held steady against the US Dollar (USD) on Tuesday, buoyed by the possibility of intervention from the Reserve Bank of India (RBI), which has helped the INR resist pressures from equity outflows and a strong dollar.
Despite this, foreign selling continues to weigh on the INR, with concerns over the Middle East conflict affecting risk-sensitive currencies. The outflow of foreign capital from Indian equities is expected to persist, as investors are increasingly drawn to China due to its recent stimulus measures and more attractive valuations.
Prime Minister Narendra Modi has departed for Russia to attend the 16th BRICS Summit in Kazan, where he is scheduled for bilateral talks with Russian President Vladimir Putin. Modi is also expected to meet Chinese President Xi Jinping, along with other BRICS leaders.
Daily Market Movers: Indian Rupee Under Pressure from Foreign Outflows
- The US Dollar gained support after US Treasury yields surged over 2% on Monday, driven by signs of economic resilience and renewed concerns over inflation, which reinforced expectations for tighter US monetary policy.
- The CME FedWatch Tool indicates an 89.1% probability of a 25-basis-point rate cut in November, with no expectations for a larger 50-basis-point cut.
- Minneapolis Fed President Neel Kashkari emphasized the importance of closely monitoring the US labor market, warning of a gradual pace for future rate cuts. He signaled that any monetary easing will likely be moderate.
- Foreign institutional investors have offloaded approximately $10 billion worth of Indian stocks so far in October, surpassing the previous monthly outflow record of $8.35 billion set in March 2020.
- The RBI’s October bulletin suggests that aggregate demand in India is expected to recover from the Q2 slowdown, driven by a surge in festive demand and improving consumer confidence.
Technical Analysis: USD/INR Holds Above 84.00, Near Record Highs
The USD/INR pair is trading around 84.10 on Tuesday. The daily chart indicates consolidation within an ascending channel, signaling a bullish trend. The 14-day Relative Strength Index (RSI) remains above 50, confirming the bullish momentum.
In terms of resistance, USD/INR may encounter a barrier at its all-time high of 84.14, reached on August 5, followed by the upper boundary of the ascending channel at 84.20.
On the downside, immediate support is seen at the nine-day Exponential Moving Average (EMA) near 84.01, which aligns with the lower boundary of the channel at the psychological 84.00 level.
USD/INR: Daily chart
