The Indian Rupee started the new week on a positive note, despite the stronger US Dollar. The anticipation of continued policy reforms post the general elections, along with a sustained economic growth outlook and significant foreign inflows, supported the INR’s upward movement.
Investors are keeping an eye on the US Chicago Fed National Activity Index, Dallas Fed Manufacturing Business Index, and Fed’s Mary Daly’s speech for further insights into the global economic scenario. The stronger-than-expected US Purchasing Managers Index data and cautious approach from the Federal Reserve might bolster the Greenback, posing a potential challenge for USD/INR.
Impact of Crude Oil Prices on INR
The surge in crude oil prices, coupled with India being the third-largest consumer of crude oil globally, continues to put pressure on the Indian Rupee. This factor, along with other global headwinds, presents a challenging environment for the local currency.
Monetary Policy Updates in India
The Monetary Policy Committee minutes released by the Reserve Bank of India highlighted the importance of maintaining an actively disinflationary policy to ensure inflation is in line with the target levels. Food inflation and recurring supply-side shocks were identified as key factors affecting the pace of disinflation in the country.
India’s HSBC Manufacturing PMI data showed a positive trend, rising to 58.5 in June from 57.5 in May. The Services PMI also demonstrated growth, climbing to 60.4 in June. These figures surpassed market expectations and indicate a strong performance in the Indian economy.
US Economic Indicators
In contrast, the US saw mixed economic data with the S&P Composite PMI, Manufacturing PMI, and Services PMI showing improvements in June. However, existing home sales in May fell short of expectations, signaling a slight contraction in the housing market.
Technical Analysis of USD/INR Pair
Despite the Indian Rupee’s strength, the USD/INR pair maintains a bullish bias on the daily chart, supported by key technical levels. The 100-day Exponential Moving Average and Relative Strength Index suggest that the current support levels are likely to hold, with the pair facing resistance at the 83.75 mark.
A comparative analysis of the US Dollar against major currencies reveals its weakness against the Japanese Yen. The heat map showcasing percentage changes in major currencies against each other provides insights into the dynamics of global currency movements and cross-rates.
The Indian Rupee’s resilience amidst challenging global conditions reflects the optimism surrounding the country’s economic prospects. Despite external pressures, the INR’s strength and positive indicators from the domestic economy signal a promising outlook for the currency in the near term. Investors will continue to monitor key economic data releases and global developments to gauge the future trajectory of the Indian Rupee.
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