The Indian Rupee (INR) weakened against the US Dollar (USD) on Monday, reaching a record low. Contributing factors include a stronger USD, uncertainties surrounding Donald Trump's trade policies, and India's economic slowdown and widening trade deficit. The Reserve Bank of India (RBI) may intervene to limit further depreciation, but market volatility is expected to persist.
The Indian Rupee (INR) experienced a decline in Monday's Asian trading session, falling to a historic low of 81.00 in the previous session. This depreciation is attributed to several factors, including a stronger US Dollar (USD) driven by month-end demand, uncertainties surrounding the incoming Donald Trump administration, and concerns about India's slowing economic growth and widening trade deficit.
While the Reserve Bank of India (RBI) may intervene by selling USD to mitigate the INR's losses, the markets are expected to remain relatively subdued as the year-end approaches, keeping the currency pair within a defined range. Later on Monday, traders will closely monitor India's Fiscal Deficit figures. On Tuesday, the Indian Trade Deficit for the third quarter (Q3) and Infrastructure Output data for November will be released. Currency experts anticipate increased volatility in the USD/INR pair moving forward. They also note that the RBI's recent intervention signals a commitment to stabilizing the INR. India's economic growth is projected to be around 6.5% in fiscal year 2024/25, closer to the lower end of the government's 6.5%-7% estimate. Deloitte Sunday predicts India's economy to expand at 6.5-6.8% this fiscal year and slightly higher between 6.7-7.3% in FY2026, driven by domestic consumption. The USD/INR pair's bullish outlook remains intact, as indicated by its position above the 100-day Exponential Moving Average (EMA)
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