The Indian Rupee (INR) remained steady against the US Dollar (USD) on Thursday, with the USD/INR pair trading within the 84.00-84.10 range. Market interventions by the Reserve Bank of India (RBI) helped limit the Rupee’s downside, despite persistent outflows from Indian equities.
India’s economic growth continues to show resilience, with the HSBC Composite Purchasing Managers Index (PMI) rising to 58.6 in October from 58.3 in September. This reflects strong private sector growth, driven by both manufacturing and services expansions.
However, the Rupee faced pressure from foreign institutional investors (FII), who have been net sellers of Indian stocks for 18 consecutive sessions. Investors shifted funds to China, attracted by stimulus measures and better valuations. The Nifty 50 index has dropped 1.7% over the past three sessions and is down 6% from last week’s record highs, affected by disappointing earnings.
On the geopolitical front, Indian Prime Minister Narendra Modi and Chinese President Xi Jinping held their first formal talks in five years at the BRICS summit in Russia. The two leaders agreed to improve communication and cooperation, aiming to resolve tensions that escalated after the deadly military clash in 2020.
In the US, the Dollar experienced slight weakness following the release of the Federal Reserve’s Beige Book on Wednesday, which indicated that economic activity remained largely unchanged across most districts. Despite this, inflation concerns have eased expectations of an aggressive Fed rate cut, with a 25-basis-point cut likely in November, according to the CME FedWatch Tool.
Traders are also keeping an eye on India’s monetary policy, as the RBI has been strategically building up foreign exchange reserves to shield against global risks. The USD/INR pair continues to hold firm above 84.00, supported by a bullish technical setup, with resistance near the all-time high of 84.14 and support around the nine-day Exponential Moving Average (EMA) at 84.02.
RBI Deputy Governor Michael Patra emphasized that strengthening macroeconomic fundamentals remains key to navigating global risks, while the Federal Reserve continues to signal a cautious approach to rate cuts amid ongoing labor market monitoring.
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