The Indian Rupee (INR) is strengthening for the second consecutive day, trading against a declining US Dollar (USD).
Factors Supporting Rupee Strength:
- Improved Current Account Deficit: India’s current account deficit narrowed in the October-December quarter, thanks to a rise in services exports, particularly software and travel. This narrowed deficit (1.2% of GDP) signifies a healthier external balance for India.
- Broader Dollar Weakness: The US Dollar is losing ground against major currencies, including the Rupee. This global trend is aiding the Rupee’s appreciation.
USD/INR Exchange Rate:
- The USD/INR pair is currently down 0.11%, trading at 83.32 (as of 17:00 UTC).
- The trading range for the day is between 83.27 and 83.50.
US Economic Data:
- US durable goods orders rose 1.4%, indicating continued resilience in the US economy.
- Mixed signals from Federal Reserve officials regarding future interest rate cuts are causing some caution in the market.
Looking Ahead:
- Investors are awaiting Friday’s release of US core PCE inflation data for clues on the Fed’s monetary policy path. This data could significantly impact the Rupee’s future trajectory.
Overall, the Indian Rupee is benefiting from a narrower current account deficit and a weaker US Dollar. However, Friday’s US inflation data will be a crucial factor to watch in determining the Rupee’s future direction.