Indian Rupee (INR) Holds Steady After All-Time Low Amid Mixed PMI Data
On Friday, the Indian Rupee (INR) traded flat after hitting a record low of 84.50 against the US Dollar (USD) in the previous session. The HSBC India Manufacturing Purchasing Managers Index (PMI) dipped slightly to 57.3 in November, compared to 57.5 previously. Conversely, the Services PMI climbed to 59.2 from 58.5 in October, offering a mixed signal to the markets. Despite these changes, the INR remained stable, reflecting limited immediate impact from the PMI data.
Factors Weighing on the Indian Rupee
A significant sell-off in domestic equity markets, coupled with rising crude oil prices fueled by ongoing geopolitical tensions between Russia and Ukraine, poses challenges for the INR. These factors may exert selling pressure on the currency. However, interventions by the Reserve Bank of India (RBI), such as state-run banks supplying USD to the market, could help mitigate INR losses.
Key Data Events to Watch
Market participants are eyeing the release of the flash US S&P Global Purchasing Managers Index (PMI) and the final Michigan Consumer Sentiment data, both due later on Friday. These reports are expected to influence the USD/INR exchange rate and provide further direction to traders.
INR Vulnerable Amid Portfolio Outflows
RBI Governor Shaktikanta Das recently emphasized the Indian economy’s strong growth, which gives the central bank flexibility to prioritize reducing inflation toward its 4% target. Despite this positive outlook, persistent portfolio outflows and USD demand continue to pressure the INR, along with concerns about a potential economic slowdown.
Dilip Parmar, a forex research analyst at HDFC Securities, noted that these factors might lead to gradual depreciation in the local currency.
US Data Highlights
Recent US economic data has strengthened the USD. Initial Jobless Claims fell to 213,000 for the week ending November 16, outperforming the forecast of 220,000. Meanwhile, Existing Home Sales rose 3.4% in October, reaching an annualized rate of 3.93 million units. Additionally, Chicago Fed President Austan Goolsbee suggested slowing the pace of rate cuts as inflation trends closer to the 2% target.
USD/INR Technical Analysis: Mixed Signals
The USD/INR pair remains within an ascending trend channel, maintaining its bullish bias as prices trade above the 100-day Exponential Moving Average (EMA) on the daily chart. However, bearish RSI divergence—where the RSI fails to confirm the new price high—raises the potential for a correction or consolidation.
Key Levels to Watch
- Upside: A breakout above the all-time high of 84.50 could pave the way for the psychological resistance level at 85.00.
- Downside: Sustained losses below 84.36 may expose the 84.00–83.90 range, which aligns with the 100-day EMA and offers key support.
Conclusion
While the Indian Rupee faces short-term pressures, interventions from the RBI and upcoming US data releases will shape the currency’s trajectory. Traders should monitor key technical levels and global economic trends to navigate the evolving USD/INR market.
