- USD/INR turns red ahead of Fed Chair Powell's testimony.
- Indian Rupee recovers recent losses on the weaker USD.
- RBI's Das projects Indian economy to grow close to 8.0% in FY24, exceeding the estimate of 7.6%.
Market Movers
- Bullish Factors:
- Indian Rupee strengthens against a weakening US Dollar (DXY).
- Optimism surrounding the Indian economy, projected to grow by 8.0% in FY24.
- Bearish Factors:
- Higher US Treasury bond yields and rising oil prices could support the US Dollar (USD).
Technical Analysis
- USD/INR trades within a multi-month-old descending trend channel since December 8, 2023, with support at 82.65 and resistance at 83.15.
- The 14-day Relative Strength Index (RSI) remains below 50.0, indicating bearish sentiment.
- A break below 82.65 could extend the downtrend, while a break above 83.00 could signal a bullish reversal.
Fed Chair Powell's Testimony and Economic Data
- Investors will focus on the US weekly Initial Jobless Claims and the second testimony by Fed Chair Powell on Thursday.
- Attention will shift to the highly-anticipated US Nonfarm Payrolls report on Friday, forecasting 200K job additions in February.
Indian Rupee: Sensitive to Bond Yields and Oil Prices
- The Indian government raised its growth forecast for FY24 to 7.6%.
- India's GDP expanded at 8.4% in the final quarter of 2023, boosted by manufacturing and construction.
- The Federal Reserve (Fed) Chair Jerome Powell has indicated that interest rate cuts are likely in 2024 but has not specified a timeline.
US Dollar Performance This Week
| Currency | Percentage Change |
|---|---|
| USD | N/A |
| EUR | -0.55% |
| GBP | -0.59% |
| CAD | -0.31% |
| AUD | -0.83% |
| JPY | -1.01% |
| NZD | -0.63% |
| CHF | -0.22% |
FAQs on the Indian Rupee
How does the Indian economy impact the Indian Rupee?
- India's high growth rate and foreign investments strengthen the Rupee due to increased demand for INR.
What is the impact of Oil prices on the Rupee?
- India imports a significant amount of Oil, and higher Oil prices increase demand for USD, depreciating the Rupee.
How does inflation in India impact the Rupee?
- Inflation reduces the Rupee's value and prompts the RBI to raise interest rates to curb inflation. Higher interest rates attract international investments, strengthening the Rupee.
How does seasonal US Dollar demand from importers and banks impact the Rupee?
- India's trade deficit and seasonal demand for imported goods lead to increased demand for USD, weakening the Rupee.