The Indian Rupee (INR) remains under pressure, trading around 88.95 per US Dollar (USD) on Monday, as the US Dollar Index (DXY) hits a fresh three-month high near 99.95. Despite this, USD/INR struggles to extend gains, reflecting some resilience in the Rupee amid slowing foreign outflows.
Foreign flows:
- October saw FIIs net selling of ₹2,346.89 crore, the fourth consecutive month of outflows.
- However, this is well below the July–September average of ₹43,290.32 crore, indicating a slowdown in selling pressure.
- Caution persists amid delayed US–India trade talks, with no deal yet finalized.
RBI intervention risk:
- As USD/INR nears its all-time high of 89.12 (late September), Reuters reports the Reserve Bank of India may intervene to stabilize the currency.
Fed policy impact:
- The US Dollar remains strong after Fed Chair Jerome Powell signaled a December rate cut is “far from assured.”
- Market expectations for a 25bp cut in December have eased to 69.3% from 91.7% last week, reflecting ongoing inflation concerns.
- FOMC members remain divided: some advocate for caution due to inflation, while others cite labor market risks.
Technical outlook:
- USD/INR trades above its 20-day EMA (~88.54), signaling a bullish near-term trend.
- 14-day RSI has crossed 60, indicating fresh upside momentum if sustained.
- Support: 87.07 (August 21 low) | Resistance: 89.12 (all-time high).
Currency heat map:
- The Rupee was strongest against the Swiss Franc today, while USD saw gains against most major currencies.
Summary:
USD/INR remains supported by a strong dollar and easing Fed dovish bets, but the pace of foreign selling and RBI intervention could limit further gains.
