The Indian Rupee (INR) weakened on Friday after reaching a one-week high in the previous session, with mixed economic data contributing to market uncertainty. The HSBC India Manufacturing Purchasing Managers Index (PMI) eased slightly to 57.1 in February from 57.5 in January, while the Indian Services PMI saw a notable rise to 61.1 from 56.5. The Composite PMI also improved to 60.6 from 57.7 in January, signaling strong services growth, but the mixed signals from the manufacturing sector kept the INR under pressure.
In addition to the mixed PMI data, foreign portfolio investment (FPI) outflows and a renewed demand for the US Dollar (USD) weighed on the local currency. A recovery in crude oil prices, with India being the world’s third-largest oil consumer, also contributed to the INR’s downside. Despite this, any significant depreciation of the Rupee may be capped by potential intervention from the Reserve Bank of India (RBI).
Market participants are also awaiting several key US economic releases later in the day, including the advanced S&P Global PMI, Existing Home Sales, and the Michigan Consumer Sentiment Index, along with speeches from Federal Reserve officials Mary Daly and Philip Jefferson.
India’s Growth Outlook and Global Risks
Moody’s Analytics revised India’s growth forecast for 2025, predicting a slowdown to 6.4% from 6.6% in 2024. The forecast highlights the potential impact of new US tariffs and weaker global demand on India’s export sector. US President Donald Trump’s announcement of fresh tariffs, including duties on lumber and forest products, further complicates the outlook for Indian exports.
Meanwhile, data from the US Department of Labor showed that Initial Jobless Claims rose to 219,000 for the week ending February 15, above the consensus estimate of 215,000. This, along with Federal Reserve comments about persistent inflationary pressures, kept the USD supported against the INR.
USD/INR Technical Outlook: Bulls Take a Breather
The USD/INR pair remains positive on the daily chart, trading above the key 100-day Exponential Moving Average (EMA), signaling bullish momentum. However, with the 14-day Relative Strength Index (RSI) hovering near 48.0, further consolidation or downside remains possible in the short term.
The immediate resistance for the USD/INR is at the psychological 87.00 level. A sustained move above this could set the pair on a course toward the all-time high near 88.00, with a potential target of 88.50.
On the downside, the first support level is at 86.35, the low from February 12. If this level is breached, the pair could test lower levels, with 86.14 (the January 27 low) and 85.65 (the January 7 low) acting as key support zones.
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