USD/INR Declines Amid Mixed Indian PMI and Lower Oil Prices by Amit Gupta, Kedia Advisory
The Indian Rupee gained early momentum on Friday, supported by improved HSBC India Manufacturing PMI and lower crude oil prices. Manufacturing PMI rose to 58.0 in January, but Services PMI eased, reflecting mixed economic signals. RBI’s minimal intervention policy and declining crude oil prices provide short-term support to the INR, while rising USD demand and foreign portfolio outflows weigh on the currency. Market participants await US S&P PMI data for further direction. The USD/INR pair remains resilient above key technical levels, signaling bullish potential unless breached.
Key Highlights
* HSBC India Manufacturing PMI rises to 58.0, while Services PMI eases.
* Lower crude oil prices support the Indian Rupee's strength.
* Rising USD demand and equity outflows weigh on INR.
* RBI maintains minimal intervention policy for the currency.
* USD/INR holds above the ascending trendline, signaling bullish potential.
The Indian Rupee (INR) traded positively during Friday’s early European session, reacting to mixed economic signals from the HSBC PMI data. Manufacturing PMI climbed to 58.0 in January, up from December’s 56.4, indicating strong manufacturing activity. However, Services PMI softened to 56.8, pulling the Composite PMI down to 57.9 from 59.2. Despite the mixed data, INR showed resilience, supported by easing crude oil prices.
India, the world’s third-largest oil consumer, benefits significantly from lower oil prices, which ease the import bill. Additionally, the Reserve Bank of India’s decision to allow minimal intervention in currency movements has provided some stability. However, pressures from USD demand by foreign banks, coupled with foreign portfolio outflows from Indian equities, continue to weigh on the INR.
Globally, attention shifts to the US S&P PMI data due later on Friday, which could impact USD/INR. Technically, the pair remains above the key 100-day EMA and ascending trendline, signaling a bullish outlook. The immediate resistance at 86.60, if breached, could push prices toward the 87.00 mark. Conversely, supports at 86.08 and 85.85 may act as cushions for downside corrections.
Adding to the pressure, Moody’s highlighted INR’s prolonged depreciation, citing it among the weakest currencies in the region. Former RBI Governor Raghuram Rajan echoed concerns about balancing interventions and maintaining export competitiveness.
Finally
USD/INR maintains a bullish outlook, with immediate resistance at 86.60 and support at 86.08. Traders await US PMI data for further cues.
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