USD/INR remains firm following Indian Services PMI data – Crypto News – Crypto News
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USD/INR edges lower ahead of Indian CPI data USD/INR edges lower ahead of Indian CPI data

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USD/INR remains firm following Indian Services PMI data – Crypto News

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  • Indian Rupee (INR) trades on a softer note on the modest US Dollar demand.
  • Analysts said global economic growth is likely to surprise on the upside, and only modest headwinds for India next fiscal.
  • Investors await the US ISM Services PMI for February on Tuesday.

Indian Rupee (INR) edges lower on Tuesday amid the modest rebound of the US Dollar (USD). India’s GDP grew at its fastest pace in 18 months, expanding 8.4% over a year earlier in the October-December quarter. Additionally, most high-frequency indicators continued to grow, showing signs of resilient economic activity.

Furthermore, most high-frequency indicators continued to improve, indicating strong economic activity. S&P Global Ratings Global Chief Economist, Paul Gruenwald said that global economic growth is likely to surprise on the upside, and hence he sees only modest headwinds for India next fiscal.

Market players will keep an eye on the US ISM Services PMI for February, due on Tuesday. Later this week, the attention will be on the Fed’s Chair Jerome Powell testifying on Wednesday ahead of the US labour market data, including Nonfarm Payrolls (NFP), Average Hourly Earning and Unemployment Rate on Friday.

Daily Digest Market Movers: Indian Rupee weakens amid the uncertainties and geopolitical risks

  • Indian S&P Global Services PMI dropped to 60.6 in February from 61.8 in January, below the market consensus of 62.0. 
  • India’s GDP growth is projected to grow 6.8% for the 2024 calendar year from 6.1% earlier, according to the global rating agency Moody’s.
  • The Reserve Bank of India (RBI) is expected to take delivery of a $5 billion FX swap due next week, owing to adequate dollar inflows and rupee liquidity staying on the tighter side.
  • India’s foreign exchange reserves rose by $2.975 billion to $619.072 billion for the week ending on February 23, according to the RBI.
  • Indian S&P Global Services PMI is estimated to improve from 61.8 in January to 62.0 in February.
  • Fed President Raphael Bostic said on Monday that the central bank is under no urgent pressure to cut interest rates given a “prospering” economy and job market.

Most recent article: Stock Market Today: Nifty and Sensex fall further after dismal Indian PMI data

Technical Analysis: Indian Rupee inches lower within a longer-term band of 82.65-83.15

Indian Rupee trades weaker on the day. USD/INR remains confined within a multi-month-old descending trend channel between 82.65 and 83.15 since December 8, 2023.

USD/INR keeps the bearish vibe unchanged in the near term as the pair holds below the 100-day Exponential Moving Average on the daily timeframe. Additionally, the 4-day Relative Strength Index (RSI) lies in the bearish territory below the 50.0 midlines, suggesting that further decline looks favorable.

The first downside target will emerge at the lower limit of the descending trend channel at 82.65. Any follow-through selling will see a drop to a low of August 23, and finally a low of June 1 at 82.25.

On the upside, the key resistance level is located at 83.00, representing the 100-day EMA and a psychological round figure. A decisive break above the latter will see a rally to a high of January 2 at 83.35, en route to 84.00.

US Dollar price in the last 7 days

The table below shows the percentage change of US Dollar (USD) against listed major currencies in the last 7 days. US Dollar was the strongest against the New Zealand Dollar.

  USD EUR GBP CAD AUD JPY NZD CHF
USD   -0.02% 0.01% 0.58% 0.68% -0.05% 1.30% 0.61%
EUR 0.01%   0.01% 0.59% 0.68% -0.02% 1.29% 0.62%
GBP 0.00% -0.02%   0.58% 0.66% -0.04% 1.28% 0.60%
CAD -0.58% -0.61% -0.59%   0.08% -0.64% 0.71% 0.02%
AUD -0.67% -0.69% -0.67% -0.09%   -0.71% 0.61% -0.07%
JPY 0.04% 0.03% 0.04% 0.61% 0.73%   1.33% 0.64%
NZD -1.32% -1.31% -1.32% -0.72% -0.65% -1.36%   -0.67%
CHF -0.61% -0.62% -0.61% -0.02% 0.07% -0.64% 0.68%  

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).

RBI FAQs

The role of the Reserve Bank of India (RBI), in its own words, is “..to maintain price stability while keeping in mind the objective of growth.” This involves maintaining the inflation rate at a stable 4% level primarily using the tool of interest rates. The RBI also maintains the exchange rate at a level that will not cause excess volatility and problems for exporters and importers, since India’s economy is heavily reliant on foreign trade, especially Oil.

The RBI formally meets at six bi-monthly meetings a year to discuss its monetary policy and, if necessary, adjust interest rates. When inflation is too high (above its 4% target), the RBI will normally raise interest rates to deter borrowing and spending, which can support the Rupee (INR). If inflation falls too far below target, the RBI might cut rates to encourage more lending, which can be negative for INR.

Due to the importance of trade to the economy, the Reserve Bank of India (RBI) actively intervenes in FX markets to maintain the exchange rate within a limited range. It does this to ensure Indian importers and exporters are not exposed to unnecessary currency risk during periods of FX volatility. The RBI buys and sells Rupees in the spot market at key levels, and uses derivatives to hedge its positions.

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