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03/09/24
27
Indian Rupee Declines Amid Strengthening Dollar and Anticipation of Key US Economic Data
The Indian Rupee (INR) faced a slight decline during Tuesday’s Asian trading session, influenced primarily by a strengthening US Dollar. While the Indian equity market showed positive trends, consistent foreign inflows and a decrease in crude oil prices could help mitigate some of the Rupee’s losses. Nevertheless, growing demand for the US Dollar from importers and safe-haven flows in anticipation of key labor market data from the US may exert additional pressure on the local currency.
Market participants are keenly awaiting the release of the HSBC India Services PMI for August, as well as the US ISM Manufacturing PMI, also set for later on Tuesday. There is considerable focus on Friday’s labor market reports from the US, which will include the Nonfarm Payrolls, Unemployment Rate, and Average Hourly Earnings for August. Insights from the Federal Reserve Chair’s recent remarks at the Jackson Hole economic symposium have heightened the importance of this week’s data. Should the numbers disappoint, market speculation regarding a more aggressive rate cut by the Federal Reserve could increase, potentially leading to downward pressure on the US Dollar.
In August, the HSBC India Manufacturing Purchasing Managers Index (PMI) fell to a three-month low of 57.5, down from 57.9 in July. Analysts observed that new orders and output reflected this decline, with increased competition cited as a contributing factor. Conversely, the HSBC Services PMI is anticipated to show slight improvement, possibly reaching 60.4 for August. The US ISM Manufacturing PMI is expected to rise modestly, and the Services PMI may dip slightly.
Technically, the performance of the USD/INR currency pair is consolidating on a daily time frame, maintaining a bullish outlook with prices holding above the 100-day Exponential Moving Average. The psychological level of 84.00 serves as a potential upside barrier, and surpassing this mark could open the door to further gains. On the flip side, key support levels to watch include 83.84 and the 100-day EMA at 83.62, which could limit downward movement for the Rupee.
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