The Indian Rupee (INR) continued its downward trajectory on Thursday, pressured by heightened geopolitical tensions and market reactions to Donald Trump’s U.S. presidential victory. Persistent foreign portfolio outflows and concerns over global economic uncertainty are further undermining the local currency.
Key Drivers Behind INR Weakness
Foreign Outflows: Foreign investors have withdrawn nearly $4 billion from Indian assets so far in November, adding to $11.5 billion in outflows last month. This sustained exodus continues to weigh heavily on the INR.
Geopolitical Risks: Escalating tensions on the global stage are driving demand for safer assets, weakening emerging market currencies like the INR.
RBI Intervention: The Reserve Bank of India (RBI) is expected to intervene to stabilize the currency, with state-run banks reportedly selling USD in the forex market to curb volatility.
Economic Outlook Offers Hope
Despite current challenges, the RBI’s monthly bulletin forecasted a rebound in economic growth for the October-December quarter. The central bank projects third-quarter GDP growth at 7.6%, up from 6.7% in the previous quarter, signaling resilience in India’s domestic economy.
Global Influences: Federal Reserve and US Data
The Federal Reserve’s cautious approach to monetary policy also influences sentiment. Fed Governor Michelle Bowman highlighted persistently high inflation, suggesting a measured stance on rate adjustments. Market odds of a U.S. rate cut have fallen from 80% to 54%, according to CME FedWatch Tool data.
Upcoming U.S. economic releases, including Initial Jobless Claims and the Philadelphia Fed Manufacturing Index, could shape further market reactions.
Technical Analysis: USD/INR Remains Constructive
The USD/INR pair remains in a bullish trend, trading above the ascending channel’s support on the daily chart. The Relative Strength Index (RSI) hovers around 66.70, favoring further upside potential.
Resistance Levels: The all-time high at 84.45 is a key barrier for bulls. A breakout above this level could push the pair toward the psychological 85.00 mark.
Support Levels: A sustained drop below the 84.35 support could lead to a retreat toward the 84.00–83.90 zone, aligning with the 100-day EMA.
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