The Indian Rupee (INR) faced downward pressure on Monday as the US Dollar (USD) strengthened, driven by cooler US inflation data. The latest figures from India’s Wholesale Price Index (WPI) showed a year-on-year increase to 3.36% in June, slightly below market expectations of 3.50%. Food prices, manufacture of food products, crude petroleum, and natural gas were key contributors to this inflation uptick, as reported by the Ministry of Commerce and Industry.
Despite hopes of potential rate cuts by the Federal Reserve (Fed) and consistent foreign inflows into India, the INR’s gains were tempered by rising crude oil prices and renewed demand for the Greenback from state-run banks and local importers. The Reserve Bank of India’s (RBI) intervention efforts are expected to mitigate further depreciation, supporting the INR from slipping to multi-month lows.
Looking ahead, market focus remains on upcoming economic indicators such as the NY Empire State Manufacturing Index for July and speeches by Fed officials like Mary Daly. Investor sentiment will likely be influenced by these developments as they assess future currency movements.
In technical terms, the USD/INR pair maintains a bullish stance above the 100-day Exponential Moving Average (EMA) on the daily chart, indicating a consolidative phase. A break above 83.65 could lead to further gains towards the all-time high of 83.75 and potentially the psychological barrier at 84.00. Conversely, a breach below the 100-day EMA support at 83.37 might push the pair towards 83.00, with further downside targets at 82.82.
The INR’s trajectory in the coming sessions will hinge on both domestic economic data releases and external factors influencing global currency markets.
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