Market Data 
- Indian Rupee trades on a flat note on Friday.
- RBI’s MPC decided to keep the repo rate unchanged at 6.5% in its June meeting due to robust growth momentum.
- Investors will shift their attention to the highly-anticipated Nonfarm Payrolls (NFP) data, which is due later on Friday.
Indian Rupee (INR) trades sideways on Friday despite the modest recovery of the US Dollar (USD). The Reserve Bank of India (RBI) Governor Shaktikanta Das announced the second bi-monthly monetary policy of the financial year 2024-25 (FY25) on Wednesday. The Indian central bank maintained the status quo on the repo rate at 6.50% and the “withdrawal of accommodation” stance. The RBI Monetary Policy Committee (MPC) decided to hold the key policy rate for the eighth consecutive meeting in June 2024 and last changed the benchmark interest rate in February 2023.
Meanwhile, the renewed USD demand from local importers and Indian equity outflows is likely to weigh on the INR in the near term despite the easing political uncertainties following India’s election. On the other hand, the potential intervention from the Reserve Bank of India (RBI) might support the Indian Rupee and cap the upside for the pair.
Investors will closely watch the US employment data, including the Nonfarm Payrolls (NFP), Unemployment Rate and Average Hourly Earnings for May. Softer-than-expected data might spur the speculation of a Federal Reserve (Fed) rate cut, dragging the Greenback and creating a headwind for USD/INR.
Daily Digest Market Movers: Indian Rupee trades flat after RBI rate decision
- RBI Governor Shaktikanta Das said the MPC will remain focused on the withdrawal of accommodation to ensure that inflation progressively aligns with the target while supporting growth.
- RBI’s Das further stated that monetary policy must continue to remain disinflationary and the central bank resolute in its commitment to aligning inflation to the target of 4
- RBI’s Das noted that global growth is sustaining momentum in 2024 and likely to be resilient supported by global trade, adding Manufacturing activity continues to gain ground on domestic demand.
- India’s Gross Domestic Product (GDP) growth is estimated at 7.2% for FY24. CPI inflation for 2024-25 is projected at 4.5% with Q1 at 4.9%, Q2 at 3.8%, Q3 at 4.6% and Q4 at 4.5%, RBI Governor said.
- Sensex has jumped over 800 points to 75,902 and Nifty 50 has risen 240 points to 23,062 as RBI raises FY25 GDP growth forecast.
- India’s foreign currency reserves fell by $2.027 billion to $646.673 billion at the end of the week on May 24. The previous week saw a remarkable increase, with reserves reaching a high of $648.7 billion, according to the RBI.
- “Expectations that the central bank will intervene to cap rupee weakness is also likely to spur natural offers (to sell dollars) near 83.50,” a foreign exchange trader at a private bank said.
- Modi is set to negotiate terms with alliance members after his Bharatiya Janata Party (BJP) surprisingly failed to win a majority in India’s election, per the Independent.
- According to Aljazeera, the BJP and its National Democratic Alliance (NDA) have won a majority despite having a much lower seat count than in the 2019 elections.
- The US weekly Initial Jobless Claims for the week ended May 31 increased by 8K to 229K from the previous week of 221K. This figure came in above the consensus of 220K.
- The four-week moving average of initial unemployment claims rose to 222K from 210K last month to near the highest level in 9 months.
- The NFP figure is projected to see 185,000 job additions in the US economy in May, while the Unemployment Rate is forecast to remain steady at 3.9% in the same report period.
Technical analysis: USD/INR’s positive outlook prevails above the 100-day EMA
The Indian Rupee remains steady on the day. The USD/INR pair maintains the constructive outlook on the daily timeframe as it held above the descending trend channel upper boundary and the key 100-day Exponential Moving Average (EMA). However, further consolidation cannot be ruled out since the RSI hovers lower towards the 50-midline, indicating more of a neutral tone.
In the bullish event, a high of June 5 at 83.55 acts as an immediate resistance level for USD/INR. The additional upside target to watch is a high of April 17 at 83.72, followed by the 84.00 round mark.
The first downside filter for USD/INR will emerge in the 83.30-83.35 zone, portraying the resistance-turned-support level and the 100-day EMA. The key contention level is seen at the 83.00 psychological level. A break below this level will pave the way to a low of January 15 at 82.78.
US Dollar price today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Pound Sterling.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.02% | 0.05% | 0.01% | -0.03% | -0.13% | 0.03% | 0.04% | |
| EUR | -0.02% | 0.04% | 0.00% | -0.04% | -0.15% | 0.01% | 0.03% | |
| GBP | -0.05% | -0.04% | -0.03% | -0.08% | -0.17% | -0.02% | -0.01% | |
| CAD | -0.01% | 0.00% | 0.05% | -0.02% | -0.13% | 0.04% | 0.04% | |
| AUD | 0.03% | 0.04% | 0.08% | 0.04% | -0.09% | 0.06% | 0.07% | |
| JPY | 0.14% | 0.15% | 0.17% | 0.13% | 0.09% | 0.14% | 0.17% | |
| NZD | -0.03% | -0.02% | 0.03% | -0.02% | -0.03% | -0.16% | 0.01% | |
| CHF | -0.03% | -0.03% | 0.01% | -0.03% | -0.06% | -0.16% | -0.01% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Indian Rupee FAQs
The Indian Rupee (INR) is one of the most sensitive currencies to external factors. The price of Crude Oil (the country is highly dependent on imported Oil), the value of the US Dollar – most trade is conducted in USD – and the level of foreign investment, are all influential. Direct intervention by the Reserve Bank of India (RBI) in FX markets to keep the exchange rate stable, as well as the level of interest rates set by the RBI, are further major influencing factors on the Rupee.
The Reserve Bank of India (RBI) actively intervenes in forex markets to maintain a stable exchange rate, to help facilitate trade. In addition, the RBI tries to maintain the inflation rate at its 4% target by adjusting interest rates. Higher interest rates usually strengthen the Rupee. This is due to the role of the ‘carry trade’ in which investors borrow in countries with lower interest rates so as to place their money in countries’ offering relatively higher interest rates and profit from the difference.
Macroeconomic factors that influence the value of the Rupee include inflation, interest rates, the economic growth rate (GDP), the balance of trade, and inflows from foreign investment. A higher growth rate can lead to more overseas investment, pushing up demand for the Rupee. A less negative balance of trade will eventually lead to a stronger Rupee. Higher interest rates, especially real rates (interest rates less inflation) are also positive for the Rupee. A risk-on environment can lead to greater inflows of Foreign Direct and Indirect Investment (FDI and FII), which also benefit the Rupee.
Higher inflation, particularly, if it is comparatively higher than India’s peers, is generally negative for the currency as it reflects devaluation through oversupply. Inflation also increases the cost of exports, leading to more Rupees being sold to purchase foreign imports, which is Rupee-negative. At the same time, higher inflation usually leads to the Reserve Bank of India (RBI) raising interest rates and this can be positive for the Rupee, due to increased demand from international investors. The opposite effect is true of lower inflation.
