USD/INR loses traction on the RBI intervention and strong Indian data


  • Indian Rupee attracts some buyers despite the firmer US Dollar.
  • India's GDP number will expand by 7.3% in the current fiscal year (2023–24), faster than the 7.2% growth in 2022–23.
  • The US Consumer Price Index (CPI) for December will be in the spotlight ahead of Indian Industrial Production.

Indian Rupee (INR) kicks off the new week on a positive note on Monday. Foreign capital inflows and the Reserve Bank of India’s (RBI) intervention have been supporting the INR from any major depreciation. The government revealed the First Advance Estimates (FAEs) of India’s GDP on Friday. The report suggested that India's Gross Domestic Product (GDP) will expand by 7.3% in the current fiscal year (2023–24), which is slightly faster than the 7.2% growth in 2022–23.

Furthermore, the United Nations (UN) stated in the report that India's economic growth will decline marginally to 6.2% in the current year from the projected expansion of 6.3% recorded in 2023, but will maintain its position as the fastest-growing major economy in the world.

Investors will monitor the December US Consumer Price Index (CPI), due later on Thursday. The headline CPI is estimated to show an increase of 3.2% YoY, while the Core CPI is forecast to ease from 4.0% to 3.8% YoY. On Friday, Indian Industrial Production and Manufacturing Output for November will be released.

Daily Digest Market Movers: Indian Rupee remains strong despite firmer USD and global factors

  • Indian S&P Global India Services PMI for December came in at 59.0 versus 56.9, above the consensus of 56.5.
  • India's foreign exchange reserves jumped by $2.759 billion to $623.2 billion in the week ended December 29, the Reserve Bank of India said on Friday.
  • The US Nonfarm Payrolls (NFP) rose 216K in December from the previous reading of 173K, stronger than the 170K expected. The US Unemployment Rate was unchanged at 3.7%.
  • The Average Hourly Earnings climbed 0.4% MoM, better than 0.3% expected while the annual figure came in at 4.1 YoY in December versus 4.0% in the previous reading, above the consensus of 3.9%.
  • According to the CME Fedwatch tool, the Fed funds futures markets have priced in 65% odds of a March rate cut from the Fed.

Technical Analysis: Indian Rupee keeps the longer-term range unchanged

Indian Rupee trades on a stronger note on the day. The USD/INR pair has remained confined in a trading range of 82.80–83.40 since September. Technically, the bullish outlook of the pair looks vulnerable as the pair is set to cross below the key 100-period Exponential Moving Average (EMA) on the daily chart. Furthermore, the 14-day Relative Strength Index (RSI) is below the 50.0 midpoint, supporting that further decline cannot be ruled out.

A decisive break below the 83.00 psychological support level will pave the way to 82.80, representing the confluence of the lower limit of the trading range and a low of September 12. The next contention level is seen at a low of August 11 at 82.60. On the upside, the upper boundary of the trading range at 83.40 acts as an immediate resistance level for USD/INR. Any follow-through buying above 83.40 will see a rally to a 2023 high of 83.47, en route to the psychological figure at 84.00.

US Dollar price in the last 7 days

The table below shows the percentage change of US Dollar (USD) against listed major currencies in the last 7 days. US Dollar was the weakest against the Pound Sterling.

  USD EUR GBP CAD AUD JPY NZD CHF
USD   0.99% 0.14% 0.89% 1.52% 2.19% 1.18% 1.25%
EUR -0.85%   -0.69% 0.04% 0.69% 1.21% 0.34% 0.35%
GBP -0.15% 0.69%   0.76% 1.38% 2.13% 1.03% 1.01%
CAD -0.90% -0.07% -0.58%   0.61% 1.31% 0.27% 0.31%
AUD -1.55% -0.70% -1.40% -0.66%   0.49% -0.36% -0.33%
JPY -2.23% -1.23% -2.03% -1.12% -0.50%   -0.89% -1.07%
NZD -1.19% -0.34% -1.04% -0.29% 0.36% 0.85%   0.02%
CHF -1.17% -0.32% -1.01% -0.25% 0.38% 1.02% 0.03%  

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

What are the key factors driving the Indian Rupee?

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.

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

EUR/USD stays in daily range near 1.0400 after US data

EUR/USD stays in daily range near 1.0400 after US data

EUR/USD extends its sideways grind at around 1.0400 in the American session on Thursday. The data from the US showed that weekly Initial Jobless Claims rose to 223,000 from 217,000 in the previous week, limiting the US Dollar's gains and helping the pair hold its ground.

EUR/USD News
GBP/USD stabilizes above 1.2300 as USD struggles to gather strength

GBP/USD stabilizes above 1.2300 as USD struggles to gather strength

GBP/USD fluctuates above 1.2300 in the second half of the day on Thursday. Although the cautious market stance doesn't allow the pair to gather bullish momentum, the lack of US Dollar demand following the weak Jobless Claims data helps it keep its footing.

GBP/USD News
Gold continues rally amid trade uncertainty

Gold continues rally amid trade uncertainty

Gold extends its correction from the multi-month high it set above $2,760 on Wednesday and trades below $2,740 on Thursday. The 10-year US Treasury bond yield stays in positive territory above 4.6% after of US data, not allowing XAU/USD to regain its traction.

Gold News
Ethereum is underperforming, while Ripple and Solana take the lead

Ethereum is underperforming, while Ripple and Solana take the lead

Ethereum price trades around $3,200 while Ripple and Solana hovers around $3.13 and $250, respectively, on Thursday. Santiment data shows that ETH market capitalization fell 4.7%, while XRP and SOL surged 36.9% and 32.2% in one month.

Read more
Federal Reserve set for an extended pause

Federal Reserve set for an extended pause

After 100bp of rate cuts the Fed has signalled it needs evidence of economic weakness and more subdued inflation prints to justify further policy loosening. President Trump’s low tax, light-touch regulation policies should be good news for growth.

Read more
Trusted Broker Reviews for Smarter Trading

Trusted Broker Reviews for Smarter Trading

VERIFIED Discover in-depth reviews of reliable brokers. Compare features like spreads, leverage, and platforms. Find the perfect fit for your trading style, from CFDs to Forex pairs like EUR/USD and Gold.

Read More

Forex MAJORS

Cryptocurrencies

Signatures