On Thursday, the Indian Rupee (INR) exhibited a notable uptick, attributed to the sale of US Dollars (USD) by both local and foreign banks. This surge propelled the INR to its highest level in over six weeks. The stability in the Indian currency follows the Federal Reserve’s decision to leave the benchmark Federal Funds Rate unchanged in January, with Fed Chair Jerome Powell emphasizing that future rate adjustments would be contingent on upcoming inflation data.
V Anantha Nageswaran, Chief Economic Advisor of India, highlighted in “The Indian Economy: A Review” report that macroeconomic stability would underpin the nation’s robust economic growth. The Reserve Bank of India (RBI) has forecasted a GDP growth of 7.4% in FY24, supported by resilient service exports and reduced oil import costs.
Finance Minister Nirmala Sitharaman presented India’s Interim Budget 2024–25, outlining plans to encourage cervical cancer prevention vaccination, enhance farmer income measures, promote investments in post-harvest activities, and strategize for oilseed production.
Despite geopolitical tension and uncertainties, the Indian Rupee remains resilient. Sitharaman emphasized the government’s commitment to comprehensive governance, development, and performance monitoring, with a focus on key groups such as the poor, women, youth, and farmers. Tax benefits for startups and extensions for investments made by sovereign wealth and pension funds were announced until March 2025. The FY24 fiscal deficit is projected at 5.8% of GDP, with the aim of reducing it to below 4.5% by FY26.
In economic indicators, the Indian S&P Global Manufacturing PMI for January improved to 56.5 from 54.9 in December. The International Monetary Fund (IMF) raised its growth forecast for India to 6.7% in FY24 and predicted steady GDP growth of 6.5% for FY25 and FY26.
Despite a decline in foreign currency reserves, the Indian Rupee appreciated by 1% to 2% in January 2024, emerging as the best-performing currency in Asian markets. In the global context, the Federal Open Market Committee (FOMC) maintained the Federal Funds Rate, with markets speculating on the possibility of easing policy in the May FOMC meeting.
Technical analysis of the USD/INR pair suggests a bearish cycle, with the INR trading in a range-bound manner. The descending trend channel indicates potential support levels at 82.90 and 82.72, while resistance-turned-support is observed at 83.00. Further resistance levels are anticipated at 83.25, 83.35, and 83.47. The 14-day Relative Strength Index (RSI) suggests a bearish environment, hinting at the likelihood of support breaking. Traders will closely monitor these technical indicators for potential market movements.
