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- Indian Rupee edges lower amid the cautious mood.
- The Reserve Bank of India (RBI) is expected to maintain the status quo on the benchmark policy rate.
- RBI interest rate decision and the US Nonfarm Payrolls (NFP) report will be the highlights on Friday.
The Indian Rupee (INR) traded on a softer note as investors turned cautious on Friday. However, the decline in crude oil prices and foreign inflows could help limit the INR’s downside. Following the meeting, the Reserve Bank of India (RBI) Monetary Policy Committee (MPC) decided to maintain the status quo on Friday, keeping the repo rate unchanged at 6.5%.
RBI Governor Shaktikanta Das stated that the central bank remains highly alert and prepared to take appropriate action as warranted to anchor inflation expectations. Meanwhile, investors will turn their attention to the US Nonfarm Payrolls (NFP) and Unemployment Rate data. Factors such as US Dollar demand and risk aversion in global markets might play a role in lifting the USD/INR pair in the near term.
Daily Digest Market Movers: Indian Rupee weakens amid the multiple headwinds and uncertainties
- RBI governor Shaktikanta Das announced that five out of six members of the Monetary Policy Committee (MPC) have voted to remain focused on the withdrawal of accommodation.
- RBI’s Das said there had been broad-based easing in core inflation, which is indicative of successful disinflation through monetary policy actions.
- He said that the near-term outlook is clouded by risks to food inflation, which might lead to a rise in inflation in November and possibly December. This should be monitored for potential second-round effects.
- He added that the Indian economy is resilient and has momentum
- Indian CPI inflation is projected at 5.4% for FY24
- The Sensex and Nifty 50 Indian benchmark indexes began the trading sessions with moderate gains. The Nifty 50 opened over 20,900, while the Sensex was close to 69,700.
- According to S&P Global Ratings’ latest report, India is set to be the world’s third-biggest economy by 2030.
- India maintained its position as the world’s fastest-growing major economy, surpassing forecasts with a GDP increase of 7.6% in the September quarter.
- RBI has kept the benchmark policy rate unchanged over the last four monetary meetings. The last adjustment occurred in February 2023, with a 6.5% rate rise.
- US Initial Jobless Claims rose 220K in the week ending December 2 versus 218K prior. Continuing Claims eased to 1.861M from the previous week of 1.925M.
Technical Analysis: Indian Rupee’s outlook remains constructive
Indian Rupee trades softer on the day. The USD/INR pair has remained confined in a trading range of 82.80–83.40 since September. Technically, USD/INR holds above the key 100-day Exponential Moving Average (EMA) with an upward slope on the daily chart, indicating the bullish outlook remains intact.