- The Indian Rupee experienced a boost on Tuesday, supported by the weaker US Dollar.
- The increased oil prices may negatively impact the INR due to escalating tensions in the Middle East and Eastern Europe.
- The US Meeting Board Consumer Confidence Index, Durable Products Orders, and House Price Index are scheduled to be released on Tuesday.
The Indian Rupee (INR) made a modest recovery on Tuesday, benefiting from the decline in the value of the US Dollar (USD). However, it experienced a significant drop to a record low of 83.48 on Friday.
This decline was primarily caused by the general weakness in other Asian currencies as well as the strong demand for the United States Dollar within the country. The Indian rupee may be subject to downward pressure at the moment as a result of the increased demand for the United States dollar and the rising prices of oil, which are a direct result of the growing number of conflicts in the Middle East and Eastern Europe. Because of this, the potential gains that the Indian Rupee could make for the time being could be limited.
The Conference Board’s report on consumer confidence in the United States, the Report on Durable Goods Orders, and the House Price Index from the Federal Housing Finance Agency are all scheduled to be released on Tuesday. The annualized Gross Domestic Product (GDP) of the United States is expected to be released on Thursday, earlier in the week, and it is anticipated that it will remain stable at 3.2% even after the release.
The Personal Consumption Price Index (PCE) data for February in the United States will be the focus of attention. The headline PCE is expected to exhibit a month-over-month increase of 0.4%, whereas the Core PCE is expected to experience a month-over-month gain of 0.3%. The information regarding the Indian Current Account is scheduled to be made public on Thursday, which will add to the list of significant items on the Indian agenda.
The Value of the Indian Rupee Remains Stable in Spite of Global Challenges
- The Reserve Bank of India (RBI) reported that India’s foreign exchange reserves hit a record-breaking $642.49 billion for the week ending on March 15.
- The increase in foreign currency reserves was enhanced by the expiration of a 5 billion Dollar/Rupee exchange agreement that reached its maturity date on March 11.
- The growth estimate for India’s Gross Domestic Product (GDP) for the current fiscal year has been revised upwards to 7.6% from 7.3%, indicating the robustness of the Indian economy.
- The RBI is expected to maintain the repo rate at 6.50% until the conclusion of Q2 of 2024, with a potential reduction of 25 basis points (bps) anticipated in Q3 2024.
- In February, there was a slight decline of 0.3% in New Home Sales in the US compared to a 1.7% increase in January. This was lower than what the market had anticipated, as they were expecting a 2.3% rise month-on-month.
- In March, the Dallas Fed Manufacturing Survey declined to -14.4, marking a decrease from the previous reading of -11.3.
The Indian Rupee Has Once Again Resumed Its Upward Trajectory in the Long Run
The Indian Rupee is performing exceptionally well today. Nevertheless, the USD/INR has regained its upward momentum in the extended period after surpassing a descending trend channel that has been in place for several months.
In the short term, the positive outlook of USD/INR remains unchanged as the pair maintains its position above the important 100-day Exponential Moving Average (EMA) on the daily chart. In addition, the 14-day Relative Strength Index is currently above the 50 midline, suggesting that there is still potential for the USD/INR to increase in the near future.
USD/INR buyers are facing a formidable challenge in surpassing the record high of 83.49. An apparent breakthrough beyond this level will open the path to the psychological level of 84.00.
Conversely, the level that was once resistance and has now become support, 83.20, serves as an initial support level. The critical resistance level is observed at the intersection of the 100-day Exponential Moving Average and the significant round number of 83.00.