Rupee’s Positive Performance Supported by Fundamentals
The Indian Rupee (INR) held its ground in positive territory on Tuesday, benefitting from inflows into equities, USD sales, and a decline in oil prices. Notably, India’s HSBC Manufacturing Purchasing Managers Index (PMI) for April remained steady at 59.1, matching the prior figure, while the Services PMI improved to 61.7. These figures contributed to the INR’s resilience, despite mixed sentiment in the market.
USD Rate-Cut Expectations Pose Challenges
However, the Rupee’s upward momentum may face resistance due to a hawkish repricing of rate-cut expectations by the US Federal Reserve (Fed). Arnob Biswas, head of foreign exchange research at SMC Global Securities, noted that this factor could limit the Rupee’s gains against the USD.
Market Focus on US Economic Indicators
Investor attention is directed towards the US preliminary S&P Global PMI for April, scheduled for release later in the day. Additionally, the final reading of the US March Personal Consumption Expenditures Price Index (PCE) on Friday will be closely watched. Stronger-than-expected US economic data could bolster speculation of delayed Fed rate cuts, potentially bolstering the USD further.
Market Movers and Economic Outlook
Lower crude oil prices, with Brent crude dropping to $86.70 a barrel on Monday, contributed to the Rupee’s resilience. Meanwhile, Indian stocks rallied, with the BSE Sensex and Nifty 50 indices posting gains. Positive economic forecasts from the Reserve Bank of India (RBI), International Monetary Fund (IMF), and Asian Development Bank (ADB) further bolstered market sentiment.
Technical Analysis and Currency Trends
While the USD/INR pair remains bullish in the longer term, short-term consolidation cannot be ruled out. Key resistance levels for the pair include 83.50 and 83.72, with potential for further upside towards the psychological level of 84.00. Conversely, support levels lie at 83.30, 83.12, and 82.78, indicating potential downside targets amidst market fluctuations.