The Indian Rupee (INR) saw a decline on Wednesday, despite the weaker US Dollar (USD) in the market. Investors are closely watching the ongoing inflows in India, which might offer some support to the INR. However, the increase in crude oil prices could potentially limit the gains of the Indian Rupee due to India’s significant consumption of oil as the third-largest consumer globally, following the US and China.
While there was a lack of significant data releases on Wednesday, investors are eagerly awaiting reports on Indian and US Purchasing Managers’ Index (PMI) on Friday. The recent inclusion of India in the JPMorgan emerging market debt index is expected to have a positive impact on the Indian Rupee in the near future.
Despite the weaker US Retail Sales report, which indicated a 0.1% increase in May from a 0.2% decline in April, analysts are speculating that the Federal Reserve (Fed) might consider cutting interest rates in the upcoming months. This anticipation is putting pressure on the US Dollar. However, the rise in crude oil prices to two-month highs could potentially cap the gains of the INR.
Looking ahead, investors are keeping an eye on upcoming economic data releases, including the Indian HSBC Manufacturing and Services PMI reports on Friday, along with the Reserve Bank of India (RBI) Meeting Minutes. On the US front, the S&P Global PMI reports are set to be released by the end of the week.
In terms of technical analysis, the USD/INR pair remains constructive in the longer term, with the pair holding above the key 100-day Exponential Moving Average (EMA). However, the 14-day Relative Strength Index (RSI) is indicating a bearish territory around 48.0, suggesting the possibility of consolidation or further downside.
For investors interested in the US Dollar price movements, the table provided shows the percentage change of the USD against major currencies this week. The US Dollar was strongest against the Japanese Yen.
Understanding the factors that influence the Indian economy is crucial for investors. Fluctuations in the demand for the US Dollar, impact of oil prices, inflation rates, trade deficits, and market volatility all play a role in determining the value of the Indian Rupee. Keeping an eye on these factors can help investors make informed decisions in the foreign exchange market.
It’s important to note that the information provided contains forward-looking statements that involve risks and uncertainties. Investors should conduct thorough research before making any investment decisions. The views expressed in this article are those of the author and do not necessarily reflect the official policy or position of FXStreet.