The Indian Rupee remains stable despite hitting a record low, influenced by global trade trends and the upcoming Fed announcement.
The Indian Rupee (INR) trades on a flat note on Wednesday after reaching a new record low of 84.92 in the previous session. The local currency remains on the defensive amid foreign fund outflows and a muted trend in domestic equities. Additionally, the widening of India’s merchandise trade deficit in November could further undermine the INR.
However, the routine foreign exchange intervention by the Reserve Bank of India (RBI) to sell the USD via state-owned banks could prevent the INR from significantly depreciating. Looking ahead, the US Federal Reserve (Fed) interest rate decision will be in the spotlight on Wednesday. The US Fed is expected to deliver a quarter of a percentage point cut at the December meeting. Traders will closely monitor the Fed Chair Jerome Powell’s press conference and the Summary of Economic Projections, or ‘dot plot.’ Any hawkish remarks from the Fed officials might lift the Greenback and contribute to the INR’s downside. While weak Asian cues weighed on market sentiment, the record high trade deficit in November pushed the rupee to a new low, which caused investors to run for cover, triggering panic selling in domestic equities, noted Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd. India's merchandise trade deficit widened to a record high of $37.8 billion in November, compared to $27.1 billion in October. Meanwhile, Exports fell by 4.9% YoY to $32.1 billion, while Imports rose 27% YoY to $69.95 billion during the month under review. The US Retail Sales climbed by 0.7% MoM in November versus a 0.5% increase (revised from 0.4%) prior, according to the US Census Bureau on Tuesday. This figure came in stronger than the 0.5% increase expected
INDIAN RUPEE FED RATE DECISION TRADE DEFICIT US DOLLAR EMERGING MARKETS
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