Indian Rupee Steady Despite Mixed Markets and Lower Inflation
The Indian rupee began the day at 82.9250/9350 levels, which was virtually unchanged from the previous day. This was due to tracking non-deliverable forwards. However, despite crude oil prices rising, the Rupee’s upside was limited due to nearby support on USD/INR. Asian currencies and equities were mixed, and Indian government bond yields fell in early trading as inflation eased.
The consumer price index-based inflation data, released on Tuesday, showed that the year-on-year inflation rate was 6.83%, which was lower than the Reuters estimate of 7%. Indian shares opened little changed, with the benchmarks seeing profit-taking at near record high levels after positive macroeconomic data. Specifically, at 10:04 AM, the S&P BSE Sensex was trading at 67,179 down 42 points, while the broader Nifty50 was at 19,985 down 8 points.
According to technical indicators, the USDINR pair’s range may be 82.75-83.10 levels. The Rupee has an immediate support at 83.00 levels. If this is breached, the Rupee may reach 83.08 followed by 83.17 levels. Conversely, the Rupee is likely to face resistance at 82.85 levels, and if it manages to break through, it may increase up to 82.76 levels, followed by 82.68 levels.
Despite mixed market conditions, the INR remains stable and is expected to remain so over the next few days. While CNH weakness remains a factor in preventing any significant appreciation of the Rupee, the RBI’s recent actions indicate that they want to contain any sharp Rupee depreciation. As a result, a range-bound INR is the most likely scenario over the next few days, at least until the FOMC.