The Indian Rupee (INR) pair has strengthened for a third straight day, supporting the US Dollar’s recent rise. The first-quarter GDP for India and the US House vote on the debt-ceiling extension arrangement both have an impact on the market’s cautious attitude.
Due to economic slowdowns and statistics from the China PMI, the US Dollar Index (DXY) is rising. Republicans in the US are ready to vote against the deal to extend the debt ceiling.
Rupee Depreciation
Indian Rupee (INR) bears can keep the upper hand due to the risk-off atmosphere in Asia, China’s PMI performance, and the problems with the US default.
Buyers of USD/INR remain optimistic due to the difference between the Reserve Bank of India’s monetary policy tilt and the Federal Reserve’s hawkish views. The price of the INR is also supported by the recent drop in the WTI crude oil price.
- Indian Rupee strengthens, US Dollar rises due to GDP and debt extension vote.
- USD/INR buyers optimistic about monetary policy, hawkish views, and WTI crude oil drop.
- Low US bond yields, uncertain S&P500 Futures; USD/INR trading focuses on India’s Q1 GDP.
The belief that policymakers can prevent default, particularly in light of conflicting data, is what motivates US dollar bulls. Consumer inflation expectations have decreased to 6.1%, while the CB Consumer Confidence Index has fallen to 102.30 for May. Additionally down is the Dallas Fed Manufacturing Business Index.
The US Treasury bond yields are still low, and the S&P500 Futures are still unsure. Trading in the USD/INR pair will center on India’s Q1 GDP, which is anticipated to increase to 5.0% YoY, before the US House votes on solutions to prevent a debt default.
After an initial setback, the pair may move higher if GDP data are positive and the RBI uses lower inflation to sustain the monetary policy. The downward-sloping resistance line from October 2022 must be broken by a sustained run-up for USD/INR bulls to keep control.
