USD/INR loses ground, all eyes on the Indian GDP, US PCE data – Crypto News – Crypto News
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Indian Rupee posts modest gains, eyes on RBI's swap maturity, US bond yield, oil prices Indian Rupee posts modest gains, eyes on RBI's swap maturity, US bond yield, oil prices

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USD/INR loses ground, all eyes on the Indian GDP, US PCE data – Crypto News

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  • Indian Rupee edges higher on the softer US Dollar.
  • India’s GDP number is expected to expand to 6.8% in the July–September quarter compared with the previous year.
  • India’s GDP Quarterly for Q2 and US Core Personal Consumption Expenditure Price Index (PCE) will be in the spotlight on Thursday.

Indian Rupee (INR) drifts higher on Thursday as dovish comments from Federal Reserve (Fed) officials undermine the US Dollar demand. Asia’s third-largest economy grew at 7.8% in the first quarter of the current fiscal year. India’s GDP number for the second quarter are scheduled to be released later in the day and is expected to grow at 6.8% in the July–September quarter compared with a year earlier.

Furthermore, Economic Affairs Secretary Ajay Seth expressed an optimistic view on the Indian economy on Wednesday, stating that the country is showing momentum and the growth rate in the second quarter is likely to be good. The Budget 2023-24 proposes to bring down the fiscal deficit to 5.9% of the GDP from 6.4% in the previous financial year. The government intends to decrease the budget deficit to less than 4.5% of GDP by 2025-26.

Investors will closely monitor India’s Gross Domestic Product (GDP) quarterly for the second quarter (Q2), which is scheduled for release on Thursday. Additionally, the development surrounding the last phase of state elections in India remains in focus, as a change in government might lead to policy modifications that could impact investors. On the US front, the Core Personal Consumption Expenditure Price Index (PCE) for October will be released, and this report could impact the expectations of the coming Fed decisions.

Daily Digest Market Movers: Indian Rupee strengthens amid multiple challenges

  • Indian economy is projected to expand by 6.8% in the July-September quarter compared to the same period last year, according to a Reuters poll.
  • Analysts anticipate that India’s Gross Domestic Product will expand by more than 6.0% next year, making it the fastest-growing major economy.
  • Reserve Bank of India (RBI) projected growth of 6.5% for the period of July to September.
  • Domestic demand in India continues to be the primary driver of economic activity, as external demand remains fragile.
  • US Gross Domestic Product Annualized for the third quarter (Q3) grew 5.2% in the third quarter (Q3) from the previous reading of 4.9%, above the market consensus of 5.0%.
  • The US Core Personal Consumption Expenditure Price Index (PCE) for October is expected to ease to 0.2% MoM and 3.5% YoY.
  • Federal Reserve (Fed) Governor Michelle Bowman said she sought to keep alive the possibility of more rate hikes, raising concerns about the longevity of inflationary pressure.
  • Fed Governor Christopher Waller stated that the Fed won’t need to raise rates further and may begin cutting rates if inflation continues to ease over the next three to five months.

Technical Analysis: Indian Rupee keeps the positive outlook intact

The Indian Rupee trades strongly on the day. The USD/INR pair has traded in a familiar range of 82.80–83.40 since September. According to the daily chart, the continuation of the upward bias remains valid as the pair holds above the key 100-day Exponential Moving Average (EMA) with an upward slope. Further upside looks favorable, backed by the 14-day Relative Strength Index (RSI) that holds above the 50.0 midline.

The immediate target for bulls to beat will emerge at the upper boundary of the trading range at 83.40. The additional upside filter to watch is the year-to-date (YTD) high of 83.47, and finally a psychological round figure of 84.00. On the flip side, the 83.00 psychological mark offered support to USD/INR. A decisive break below 83.00 will see a drop to the confluence of the lower limit of the trading range and a low of September 12 at 82.80, followed by a low of August 11 at 82.60.

US Dollar price today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Japanese Yen.

  USD EUR GBP CAD AUD JPY NZD CHF
USD   0.04% -0.03% -0.10% -0.40% 0.06% -0.37% -0.05%
EUR -0.03%   -0.07% -0.12% -0.43% 0.04% -0.39% -0.10%
GBP 0.03% 0.07%   -0.06% -0.36% 0.12% -0.32% -0.01%
CAD 0.10% 0.13% 0.07%   -0.30% 0.17% -0.27% 0.04%
AUD 0.36% 0.43% 0.35% 0.31%   0.46% 0.02% 0.33%
JPY -0.08% -0.04% -0.12% -0.17% -0.49%   -0.43% -0.11%
NZD 0.36% 0.39% 0.32% 0.26% -0.03% 0.42%   0.31%
CHF 0.06% 0.09% 0.01% -0.05% -0.35% 0.12% -0.31%  

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).

Indian economy FAQs

The Indian economy has averaged a growth rate of 6.13% between 2006 and 2023, which makes it one of the fastest growing in the world. India’s high growth has attracted a lot of foreign investment. This includes Foreign Direct Investment (FDI) into physical projects and Foreign Indirect Investment (FII) by foreign funds into Indian financial markets. The greater the level of investment, the higher the demand for the Rupee (INR). Fluctuations in Dollar-demand from Indian importers also impact INR.

India has to import a great deal of its Oil and gasoline so the price of Oil can have a direct impact on the Rupee. Oil is mostly traded in US Dollars (USD) on international markets so if the price of Oil rises, aggregate demand for USD increases and Indian importers have to sell more Rupees to meet that demand, which is depreciative for the Rupee.

Inflation has a complex effect on the Rupee. Ultimately it indicates an increase in money supply which reduces the Rupee’s overall value. Yet if it rises above the Reserve Bank of India’s (RBI) 4% target, the RBI will raise interest rates to bring it down by reducing credit. Higher interest rates, especially real rates (the difference between interest rates and inflation) strengthen the Rupee. They make India a more profitable place for international investors to park their money. A fall in inflation can be supportive of the Rupee. At the same time lower interest rates can have a depreciatory effect on the Rupee.

India has run a trade deficit for most of its recent history, indicating its imports outweigh its exports. Since the majority of international trade takes place in US Dollars, there are times – due to seasonal demand or order glut – where the high volume of imports leads to significant US Dollar- demand. During these periods the Rupee can weaken as it is heavily sold to meet the demand for Dollars. When markets experience increased volatility, the demand for US Dollars can also shoot up with a similarly negative effect on the Rupee.

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