• Indian Rupee attracts some buyers on the weaker USD and robust foreign inflows.
• India is on track to become one of the top three global economies, Indian Prime Minister Modi said.
• The US Consumer Price Index (CPI) for December will be a closely watched event on Thursday.

Indian Rupee (INR) trades on a positive note on Thursday, supported by robust foreign inflows. On Wednesday, India’s Prime Minister Narendra Modi stated that India is set to become one of the top three global economies. Modi acknowledged India’s economic development as a decade of structural reforms that improved the country’s capacity and competitiveness amid global headwinds.

The highlight on Thursday will be the US inflation report, as measured by the Consumer Price Index (CPI). The stronger-than-expected inflation data could lift the US Dollar and potentially delay a rate cut from the Federal Reserve (Fed). On Friday, attention will shift to the December Indian CPI, Industrial Production, and Manufacturing Output.

Daily Digest Market Movers: Indian Rupee remains strong amid multiple headwinds

• The Indian government plans to cut its fiscal deficit by at least 50 basis points (bps) in fiscal year 2025.
• The Indian government plans to increase capital spending by up to 20% in fiscal year 2025.
• The World Bank kept its FY25 economic growth projection for India unchanged at 6.4%, owing to strong domestic demand, rising public infrastructure spending, and strong private-sector credit growth.
• Bloomberg Index Services proposed including eligible Indian bonds in its emerging market local currency index from September.
  Finance Minister Nirmala Sitharaman said on Wednesday that India is estimated to be a $5 trillion economy by 2027–28 and become the third largest economy.
• New York Federal Reserve (Fed) President John Williams said that interest rates in the US will likely need to stay high “for some time” until the central bank is confident that inflation is returning to 2%.
• Atlanta Fed Bank President Raphael Bostic emphasized that monetary policy needs to stay tight while inflation remains above the 2% target. Fed’s Bowman stated that the policy is sufficiently restrictive.
• The US Consumer Price Index (CPI) data for December will be due on Thursday at 13:30 GMT. The Core CPI is estimated to show an increase of 3.8% YoY, while headline inflation is projected to grow 3.2% YoY versus 3.1% prior.

Technical Analysis: Indian Rupee could see a downleg in the shorter term

Indian Rupee trades strongly on the day. The USD/INR pair remains stuck within a multi-month trading range between 82.80 and 83.40. According to the daily chart, USD/INR resumes a bearish outlook in the shorter timeframe as the pair holds below the key 100-period Exponential Moving Average (EMA). Additionally, the downward momentum is supported by the 14-day Relative Strength Index (RSI) that stands below the 50.0 midpoint.

A breach below the 83.00 psychological level will see a drop to the critical contention level at 82.80, portraying the confluence of the lower limit of the trading range and a low of September 12. Further south, the next downside target is located at a low of August 11 at 82.60. On the other hand, the immediate resistance level for USD/INR will emerge near the upper boundary of the trading range at 83.40. A break above 83.40 will expose a 2023 high of 83.47, followed by the psychological figure at 84.00.

US Dollar price in the last 7 days

The table below shows the percentage change of US Dollar (USD) against listed major currencies in the last 7 days. US Dollar was the strongest against the Japanese Yen.