The Indian Rupee is struggling to gain against the stronger US Dollar (USD). The Reserve Bank of India (RBI) Governor expressed optimism about the Indian economy. Investors will be paying close attention to the Federal Open Market Committee (FOMC) policy meeting. On Wednesday, the Indian Rupee decreased due to increased demand for the US Dollar. The narrative of higher US interest rates has caused US Treasury bond yields to rise to multi-year highs, which benefits the USD/INR pair. Geopolitical risks in the Middle East could lead to higher oil prices and impact Indian importers. However, RBI Governor Shaktikanta Das stated that India’s growth momentum remains strong and that the Gross Domestic Product (GDP) in the second quarter of Fiscal Year 2024 is expected to exceed expectations. Das also emphasized that geopolitical risks are the biggest challenge to growth but believes that India is better positioned to handle potentially risky situations compared to other countries. The FOMC policy meeting will be closely monitored, although no change in rates is expected. However, a hawkish stance during the press conference could cause volatility in the Indian market. The focus will shift to US Nonfarm Payrolls later this week. The Indian Rupee maintains a bearish sentiment amid uncertainty. RBI Governor Das stated that GDP growth for the second quarter of FY24 will surpass expectations. The RBI will monitor inflation to ensure it remains within the 4% target. The International Monetary Fund (IMF) raised its projected growth rate for India to 6.3% in October. Overseas investors sold $2.74 billion in Indian equities in October, the largest monthly sell-off since January. According to the RBI, India’s foreign currency reserves decreased by $2.36 billion to $583.53 billion in the week ending October 20. The technical analysis suggests that the Indian Rupee continues to have a bearish outlook within a familiar range of 83.00-83.35 against the USD. The key resistance level is at 83.35, and a break above it could lead to a rally towards year-to-date highs of 83.45. On the downside, a break below 83.00 could pave the way for further losses. In the past 7 days, the US Dollar has shown varying percentage changes against major currencies. The heat map displays these changes visually. The terms “risk-on” and “risk-off” refer to the level of risk that investors are willing to tolerate. In a “risk-on” market, investors are optimistic and willing to buy risky assets. In a “risk-off” market, investors are more cautious and prefer safer assets. During a “risk-on” period, stock markets tend to rise, commodities (excluding Gold) gain value, and currencies of commodity-exporting nations strengthen. In a “risk-off” market, bonds and safe-haven currencies like the USD, JPY, and CHF perform well. The AUD, CAD, NZD, RUB, and ZAR tend to rise during “risk-on” periods due to their reliance on commodity exports.
