The Indian Rupee (INR) remains stable against the U.S. Dollar (USD) on Tuesday, supported by potential market interventions from the Reserve Bank of India (RBI). These interventions have helped the INR withstand equity outflows and the dollar’s strength.
Despite this stability, ongoing foreign selling continues to pressure the INR, particularly amid concerns related to the conflict in the Middle East, which has affected risk-sensitive currencies. Investors are increasingly shifting funds from Indian equities to China, attracted by recent stimulus measures and more favorable valuations.
Prime Minister Narendra Modi is currently in Russia for the 16th BRICS Summit in Kazan, where he is set to engage in bilateral discussions with President Vladimir Putin and meet with Chinese President Xi Jinping, along with other BRICS leaders.
Daily Digest: Indian Rupee Faces Pressure from Foreign Outflows
The USD has gained traction, fueled by a rise in U.S. Treasury yields, which climbed over 2% on Monday, reflecting signs of economic resilience and concerns over potential inflation. The CME FedWatch Tool indicates an 89.1% likelihood of a 25-basis-point rate cut in November, with no expectations for a larger cut.
Federal Reserve Bank of Minneapolis President Neel Kashkari noted that the Fed is closely monitoring the U.S. labor market and cautioned investors to expect a gradual pace of rate cuts in the future.
In October, foreign institutional investors have sold around $10 billion worth of Indian stocks, surpassing the previous monthly record of $8.35 billion set in March 2020. The RBI’s October bulletin indicated that aggregate demand in India is projected to rebound from the temporary slowdown in the second quarter, driven by festive demand and increased consumer confidence.
Technical Analysis: USD/INR Stays Above 84.00, Approaching Record Highs
The USD/INR pair is trading around 84.10 on Tuesday, consolidating within a bullish ascending channel pattern. The 14-day Relative Strength Index (RSI) remains above 50, reinforcing this bullish momentum.
Resistance for the USD/INR is identified at its all-time high of 84.14, reached on August 5, with the upper boundary of the ascending channel near 84.20. Immediate support is found at the nine-day Exponential Moving Average (EMA) around 84.01, aligning with the lower boundary of the ascending channel near the psychological level of 84.00.
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