RBI MPC Meeting: USD/INR Strengthens, Investors on Alert

• Indian Rupee loses ground as demand for US Dollar rises.
• India’s S&P Global Services PMI for November drops to 56.9, down from the previous 58.4 and worse than the expected 58.0.
• The Reserve Bank of India (RBI) likely to keep the repo rate unchanged at 6.5% at its December meeting.

On Wednesday, the Indian Rupee (INR) edged lower against the firmer US Dollar (USD). An extensive report by S&P predicts India to be the fastest-growing major economy in the next three years, projecting a growth rate of 7% in the 2026–27 fiscal year. However, it remains uncertain whether India can emerge as the next major global manufacturing hub.

India’s S&P Global Services Purchasing Managers’ Index (PMI) for November came in at 56.9, down from 58.4 in October, which is lower than the expected 58.0. Despite the slowdown, the index remained above the 50-mark threshold, indicating growth.

The Reserve Bank of India (RBI) is set to hold its three-day Monetary Policy Committee (MPC) meeting, with the market anticipating no change in the repo rate which is expected to remain at 6.5%. This is due to positive GDP growth and easing core inflation.

Daily Digest: Indian Rupee Reacts to Global Factors

• Indian markets continue to rally due to a positive US interest rate outlook, stable oil prices, strong domestic macroeconomic data, increased foreign inflows, and growing optimism about policy continuity in 2024.
• India’s stock market value exceeded $4 trillion for the first time, marking a significant milestone.
• S&P Global India Services PMI fell to 56.9 in November, below expectations.
• The RBI is expected to sell US Dollars near 83.38–83.39 levels to prevent further Rupee depreciation, according to Reuters.
• Analysts predict that the RBI will maintain the policy repo rate at its December meeting, given the moderate core CPI inflation and CPI inflation on October 23.
• RBI Governor Shaktikanata Das mentioned that while headline inflation has moderated, the Indian economy remains sensitive to global food price shocks and adverse weather events.
• US ISM Services PMI rose to 52.7 in November, surpassing market expectations.
• JOLTS Job Openings declined in October to their lowest level since March 2021.
• Fed futures are now projecting that the Fed might start cutting policy rates by March or May.

Technical Analysis: Positive Outlook for Indian Rupee

Indian Rupee is trading weaker today.

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