Indian Rupee Gains Amid RBI Moves, Awaits CPI Data

Published 13-01-2025, 08:56 am

The Indian Rupee (INR) rebounded on Monday, recovering losses from its record low, supported by Reserve Bank of India's (RBI) interventions. However, a strong US Dollar, foreign equity outflows, and higher oil prices pose challenges to the INR's momentum. India’s December Consumer Price Index (CPI) inflation data, expected to rise to 5.3% YoY, is a critical focus for traders. Meanwhile, the USD/INR pair maintains its uptrend, with overbought technical indicators suggesting caution. Market participants are also assessing global cues such as robust US employment data, Federal Reserve's hawkish stance, and elevated crude oil prices, which may influence the rupee’s trajectory.

Key Highlights

  • Indian Rupee recovers after hitting a record low last session.
  • RBI interventions and USD sales lend support to the INR.
  • US Dollar strengthens on robust employment data, weighing on INR.
  • India’s December CPI inflation is expected to rise to 5.3%.
  • USD/INR trades above key EMAs, with overbought RSI signaling caution.

The Indian Rupee (INR) showed strength on Monday, recovering from its record low in the previous session. The Reserve Bank of India (RBI) is believed to have intervened by selling US Dollars, providing support to the local currency. Despite this, the INR faces headwinds from a stronger US Dollar, higher crude oil prices, and sustained foreign equity outflows.

The USD gained momentum following better-than-expected US Nonfarm Payrolls (NFP) data, which reinforced expectations of the Federal Reserve maintaining a hawkish policy stance. This outlook has kept the USD buoyant, exerting pressure on the INR. In parallel, India’s heavy reliance on oil imports continues to impact its trade deficit, with elevated crude oil prices adding to the challenges.

Market attention now shifts to India’s December CPI inflation data, expected to show a 5.3% YoY rise. Higher inflation readings could influence RBI’s monetary policy decisions, impacting the rupee’s trajectory. Meanwhile, on the technical front, the USD/INR pair remains in an uptrend, trading above its 100-day Exponential Moving Average (EMA). However, the 14-day Relative Strength Index (RSI) has entered overbought territory, indicating a potential for consolidation.

For USD/INR, resistance at 86.15 remains a critical level, with further upside potential toward 86.50 if breached. Conversely, support lies at 85.85, followed by 85.65 and the psychological level of 85.00. Traders should watch for global and domestic developments as they influence near-term movements.

Finally
The Indian Rupee’s rebound may face hurdles from global factors and inflationary pressures. Critical levels for USD/INR are 86.15 on the upside and 85.85 on the downside

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2025 - Fusion Media Limited. All Rights Reserved.