The Indian Rupee (INR) experienced mild losses against the stronger US Dollar (USD) on Thursday, primarily due to significant outflows from Indian equities and heightened demand for USD from foreign banks and importers.
Despite the pressures on the local currency, the recent decline in crude oil prices—amid easing concerns over supply disruptions in the Middle East—may provide some support for the INR, as India is the world’s third-largest oil consumer. Additionally, routine foreign exchange interventions by the Reserve Bank of India (RBI) could help limit the rupee’s decline.
Traders are awaiting the release of US Retail Sales data for September, as well as key economic indicators such as weekly Initial Jobless Claims, Industrial Production, and the Philadelphia Fed Manufacturing Survey, scheduled for later today.
Market Overview: Indian Rupee Remains Under Pressure Amid Foreign Fund Outflows
India’s trade deficit for September was reported at $20.78 billion, a decrease from $29.65 billion in August, according to data from the commerce ministry. Exports saw a slight increase to $34.58 billion in September, up from $34.41 billion year-on-year, while imports dropped to $55.36 billion from $64.36 billion.
Notably, foreign funds withdrew over $7 billion from Indian equities during the month leading up to October 14, marking the largest outflow in over four years, as reported by Bloomberg.
In the United States, Retail Sales are projected to rise by 0.3% in September, an improvement from 0.1% in the previous month. According to the CME FedWatch tool, traders are pricing in a nearly 94% chance of a 25 basis point Fed rate cut in November.
Technical Analysis: USD/INR Maintains Constructive Outlook
The Indian Rupee remains in negative territory today, with the USD/INR pair showing a bullish trend as it holds above an ascending trend line and the key 100-day Exponential Moving Average (EMA) on the daily chart. The upward momentum is further supported by the 14-day Relative Strength Index (RSI), which is above the midline at approximately 58.80, suggesting that the uptrend is likely to gain traction rather than reverse.
Sustained trading above the all-time high of 84.15 could pave the way for the pair to reach the 84.50 level. The next psychological barrier to monitor is at 85.00.
Conversely, if bearish candlesticks form below the rising trend line, the pair could decline to 83.90, the low recorded on October 10. A breach of this level might open the door to further declines towards 83.70, coinciding with the 100-day EMA. The next significant support level is anticipated at 83.00, representing a key psychological threshold and the low from May 24.
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