Indian Rupee Gains Amid RBI Moves, Awaits CPI Data by Amit Gupta, Kedia Advisory
The Indian Rupee (INR) rebounded on Monday, recovering losses from its record low, supported by Reserve Bank of India's (RBI) interventions. However, a strong US Dollar, foreign equity outflows, and higher oil prices pose challenges to the INR's momentum. India’s December Consumer Price Index (CPI) inflation data, expected to rise to 5.3% YoY, is a critical focus for traders. Meanwhile, the USD/INR pair maintains its uptrend, with overbought technical indicators suggesting caution. Market participants are also assessing global cues such as robust US employment data, Federal Reserve's hawkish stance, and elevated crude oil prices, which may influence the rupee’s trajectory.
Key Highlights
* Indian Rupee recovers after hitting a record low last session.
* RBI interventions and USD sales lend support to the INR.
* US Dollar strengthens on robust employment data, weighing on INR.
* India’s December CPI inflation is expected to rise to 5.3%.
* USD/INR trades above key EMAs, with overbought RSI signaling caution.
The Indian Rupee (INR) showed strength on Monday, recovering from its record low in the previous session. The Reserve Bank of India (RBI) is believed to have intervened by selling US Dollars, providing support to the local currency. Despite this, the INR faces headwinds from a stronger US Dollar, higher crude oil prices, and sustained foreign equity outflows.
The USD gained momentum following better-than-expected US Nonfarm Payrolls (NFP) data, which reinforced expectations of the Federal Reserve maintaining a hawkish policy stance. This outlook has kept the USD buoyant, exerting pressure on the INR. In parallel, India’s heavy reliance on oil imports continues to impact its trade deficit, with elevated crude oil prices adding to the challenges.
Market attention now shifts to India’s December CPI inflation data, expected to show a 5.3% YoY rise. Higher inflation readings could influence RBI’s monetary policy decisions, impacting the rupee’s trajectory. Meanwhile, on the technical front, the USD/INR pair remains in an uptrend, trading above its 100-day Exponential Moving Average (EMA). However, the 14-day Relative Strength Index (RSI) has entered overbought territory, indicating a potential for consolidation.
For USD/INR, resistance at 86.15 remains a critical level, with further upside potential toward 86.50 if breached. Conversely, support lies at 85.85, followed by 85.65 and the psychological level of 85.00. Traders should watch for global and domestic developments as they influence near-term movements.
Finally
The Indian Rupee’s rebound may face hurdles from global factors and inflationary pressures. Critical levels for USD/INR are 86.15 on the upside and 85.85 on the downside
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