Key Points
- Indian Rupee (INR) shows resilience, recovering on Friday amidst mixed economic signals.
- Positive US February PPI impacts investor expectations, challenging a June Federal Reserve rate cut.
- India’s WPI inflation for February falls to a four-month low, adding selling pressure on INR.
- RBI is expected to maintain interest rates in the upcoming MPC meeting, with a repo rate cut anticipated in H2 2024.
- USD/INR has been in a narrow price range since early December, with technical indicators suggesting potential movements.
The Indian Rupee demonstrated notable resilience, bouncing back on Friday without a specified date amidst fluctuating global and domestic economic indicators. The US February Producer Price Index (PPI) significantly influenced the recovery, which came out stronger than anticipated. This data influenced investor expectations, casting doubts on the Federal Reserve’s potential rate cut in June.
February WPI Dips to 4-Month Low, RBI Holds Rate.
India’s Wholesale Price Index (WPI) inflation for February showcased a weaker-than-expected trend, cooling to a four-month low as reported by the statistics ministry. This development exerted additional selling pressure on the INR, spotlighting the nuanced interplay between inflation trends and currency valuation. The Reserve Bank of India (RBI), amid these economic oscillations, is expected to maintain a steady course during the next Monetary Policy Committee (MPC) meeting. Market expectations suggest a repo rate cut later in 2024, cautiously avoiding preempting the Federal Reserve’s rate adjustment cycle.
USD/INR in 82.60–83.15 Range: Technical Outlook
The technical landscape offers mixed USD/INR exchange rate indicators. Since December 8, 2023, the currency pair has been oscillating between 82.60 and 83.15, hinting at a consolidating market sentiment. The exchange rate’s position below the 100-day Exponential Moving Average (EMA) reinforces a bearish outlook. Simultaneously, the 14-day Relative Strength Index (RSI) rebounding above the 50.0 midpoint hints at a potential upward movement possibility. Key levels to watch include the first upside barrier near 83.00 and the upper boundary of the descending trend channel at 83.15, with further upside targets set at 83.35 and 84.00.
Upcoming Data: Impact on Indian Rupee Volatility
The upcoming release of Indian trade data and US industrial figures will bring fresh market volatility. Additionally, the preliminary Michigan Consumer Sentiment Index, slated for release later the same day, will offer deeper insights into consumer confidence and spending trends, potentially influencing the INR’s trajectory. These releases are critical in gauging the broader economic pulse, offering valuable cues to investors and policymakers alike.
