• Indian Rupee loses traction on the stronger US Dollar. 
  • The Reserve Bank of India (RBI) is anticipated to keep the rate unchanged at 6.50% on Thursday. 
  • Investors will focus on the US ISM Services PMI for January, due on Monday. 

Indian Rupee (INR) recovers its recent losses on Monday. The rebound of the pair is bolstered by the upbeat US job data that prompted a rise in Treasury yields and the US Dollar (USD). Continued strength in US job market data is expected to dampen hopes for early rate cuts by the US Federal Reserve (Fed), which boosts the Greenback broadly.

Economists anticipated that the Reserve Bank of India (RBI) would keep the rate unchanged until at least the third quarter, compared to expectations that the US Federal Reserve would cut its key interest rate next quarter.

Later on Monday, the US ISM Services PMI will be released. Market players will closely watch the RBI interest rate decision on Thursday, which is expected to maintain the status quo for a sixth consecutive policy review. 

Daily Digest Market Movers: Indian Rupee remains under pressure amid global factors

  • India’s S&P Global Services PMI improved to 61.8 in January from 59.0 in the previous reading, beating the estimation of 61.2. The figure remains above the 50-mark separating expansion from contraction for the 30th consecutive month.
  • India's January services growth is at a six-month high due to strong demand.
  • India's 10-year benchmark bond yield closed at 7.0555% on Friday, marking the biggest weekly drop in 15 months.
  • The Reserve Bank of India (RBI) will leave its benchmark interest rate at 6.50% on Thursday, according to economists polled by Reuters.
  • The Indian government will spend a record 11.11 trillion Rupees (approximately $134 billion) on infrastructure development.
  • The budget deficit for fiscal year 24 is projected to be 5.8% of GDP.
  • The Indian government aims to lower the budget deficit to less than 4.5% by FY26.
  • The Indian S&P Global Manufacturing PMI rose to 56.5 in January from 54.9 in November.
  • The US Nonfarm Payrolls (NFP) report came in better than expected, surging to 353K in January from 333K in December (revised up from 216K). 
  • The Unemployment Rate was unchanged at 3.7%. Finally, wage growth is firming, with Average Hourly Earnings growing 4.5% YoY in January from 4.4% in December.
  • The probability of a March rate cut has dropped to 19%, compared to 38% just a day ago, according to the CME FedWatch tool. 
  • Federal Reserve Chair Jerome Powell said a rate cut in March is too soon, as he doesn’t believe the FOMC will have the confidence by then that inflation is heading back to 2% sustainably. 
  • Powell added that policymakers see it appropriate to cut rates this year, but it is prudent to be open to the possibility of rates falling from spring onwards.
  • The US central bank will discuss at the March meeting the timing of easing the pace of quantitative tightening (QT).

Technical Analysis: Indian Rupee extends the range play within 82.78–83.45

Indian Rupee trades on a weaker note on the day. The USD/INR pair consolidated within a two-month-old descending trend channel of 82.78–83.45. From a technical perspective, the bearish tone of USD/INR remains unchanged as the pair is below the key 100-period Exponential Moving Average (EMA) on the daily chart. Additionally, the 14-day Relative Strength Index (RSI), stands below the 50.0 midline, indicating that bearish momentum is in play.

On the other hand, any follow-through buying above the 83.00 psychological handle will see a rally to the upper boundary of the descending trend channel and a high of January 18 at 83.18. The next hurdle will emerge at a high of January 2 at 83.35.

In case our bearish USD scenario plays out, the lower limit of the descending trend channel at 82.71. acts as a potential support level for the pair. A breach of this level could take the pair back to a low of August 23 at 82.45, followed by a low of June 1 at 82.25.

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 Swiss Franc.

  USD EUR GBP CAD AUD JPY NZD CHF
USD   0.01% 0.10% 0.01% -0.12% -0.08% -0.17% 0.12%
EUR -0.01%   0.09% 0.01% -0.13% -0.10% -0.17% 0.10%
GBP -0.10% -0.09%   -0.09% -0.22% -0.19% -0.27% 0.01%
CAD -0.01% -0.01% 0.08%   -0.13% -0.10% -0.18% 0.10%
AUD 0.12% 0.15% 0.24% 0.13%   0.03% -0.04% 0.23%
JPY 0.08% 0.08% 0.17% 0.10% -0.05%   -0.09% 0.20%
NZD 0.16% 0.17% 0.27% 0.17% 0.04% 0.08%   0.28%
CHF -0.12% -0.11% -0.02% -0.10% -0.23% -0.20% -0.28%  

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).

RBI FAQs

What is the role of the Reserve Bank of India?

The role of the Reserve Bank of India (RBI), in its own words, is "..to maintain price stability while keeping in mind the objective of growth.” This involves maintaining the inflation rate at a stable 4% level primarily using the tool of interest rates. The RBI also maintains the exchange rate at a level that will not cause excess volatility and problems for exporters and importers, since India’s economy is heavily reliant on foreign trade, especially Oil.

How do the decisions of the Reserve Bank of India affect the Rupee?

The RBI formally meets at six bi-monthly meetings a year to discuss its monetary policy and, if necessary, adjust interest rates. When inflation is too high (above its 4% target), the RBI will normally raise interest rates to deter borrowing and spending, which can support the Rupee (INR). If inflation falls too far below target, the RBI might cut rates to encourage more lending, which can be negative for INR.

Does the Reserve Bank of India directly intervene in FX markets?

Due to the importance of trade to the economy, the Reserve Bank of India (RBI) actively intervenes in FX markets to maintain the exchange rate within a limited range. It does this to ensure Indian importers and exporters are not exposed to unnecessary currency risk during periods of FX volatility. The RBI buys and sells Rupees in the spot market at key levels, and uses derivatives to hedge its positions.

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

Australian Dollar extends gains despite  mixed PMI

Australian Dollar extends gains despite mixed PMI

The Australian Dollar (AUD) continues to strengthen against the US Dollar (USD) following the release of mixed Judo Bank Purchasing Managers' Index (PMI) data from Australia on Friday. The AUD also benefits from a hawkish outlook by the Reserve Bank of Australia (RBA) regarding future interest rate decisions. 

AUD/USD News
Japanese Yen fails to build on stronger CPI-led intraday uptick against USD

Japanese Yen fails to build on stronger CPI-led intraday uptick against USD

The Japanese Yen (JPY) attracted some follow-through buying for the second successive day following the release of slightly higher-than-expected consumer inflation figures from Japan. This comes on top of Thursday's hawkish remarks from BoJ Governor Kazuo Ueda, which keeps expectations for a December interest rate hike in play.

USD/JPY News
Gold price advances to near two-week top on geopolitical risks

Gold price advances to near two-week top on geopolitical risks

Gold price touched nearly a two-week high during the Asian session as the worsening Russia-Ukraine conflict benefited traditional safe-haven assets. The weekly uptrend seems unaffected by bets for less aggressive Fed policy easing, sustained USD buying and the prevalent risk-on environment

Gold News
Ethereum Price Forecast: ETH open interest surge to all-time high after recent price rally

Ethereum Price Forecast: ETH open interest surge to all-time high after recent price rally

Ethereum (ETH) is trading near $3,350, experiencing an 10% increase on Thursday. This price surge is attributed to strong bullish sentiment among derivatives traders, driving its open interest above $20 billion for the first time. 

Read more
A new horizon: The economic outlook in a new leadership and policy era

A new horizon: The economic outlook in a new leadership and policy era

The economic aftershocks of the COVID pandemic, which have dominated the economic landscape over the past few years, are steadily dissipating. These pandemic-induced economic effects are set to be largely supplanted by economic policy changes that are on the horizon in the United States.

Read more
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

Forex MAJORS

Cryptocurrencies

Signatures