USD/INR Price News: Rupee grinds near 81.90 as India growth optimism supersedes easy inflation woes

• USD/INR remains sidelined after snapping three-day downtrend the previous day.
• IMF expects India to lead global growth numbers, softer CPI appears already priced in.
• Downbeat US inflation numbers, unimpressive Fed Minutes weigh on US Dollar.
• Risk catalysts, more inflation clues eyed for clear directions.

USD/INR remains indecisive around 81.90 during early Thursday, following its first daily fall in four the previous day. In doing so, the Indian Rupee (INR) pair traces the broad market moves amid a light calendar and mixed macros.

The USD/INR pair’s fall on Wednesday could be linked to the downbeat US data and Fed Minutes, as well as comparatively better Indian numbers. Also fueling the Rupee are hawkish statements from the International Monetary Fund (IMF).

On Wednesday, India’s Consumer Price Index (CPI) for March slipped beneath market forecasts of 5.80% to 5.66%, versus 5.44% prior, whereas Industrial Output and Manufacturing Output improved for February. That said, India’s Industrial Output grew 5.6% versus 5.1% expected and 5.2% prior whereas the Manufacturing Output also rose by 5.3% in February compared to 0.2% expected and 3.47% previous readings.

On the other hand, IMF terms India as one of the fastest growing economies in the world even as it cuts New Delhi’s 2024 Gross Domestic Product (GDP) forecast. That said, the global lender estimates the Asian nation to grow by 5.9% in the current fiscal year versus 6.1% anticipated previously.

That said, the US CPI dropped to the lowest level since May 2021, to 5.0% YoY in March from 6.0% prior and versus 5.2% market forecasts. However, the annual Core CPI, namely the CPI ex Food & Energy, improved to 5.6% YoY during the said month while matching forecasts and surpassing 5.5% prior.

Further, the Minutes of the latest Federal Open Market Committee (FOMC) Monetary Policy Meeting also challenged the Fed hawks by stating that the expectations for rate hikes were scaled back due to the turmoil in the banking sector. “Several Federal Reserve policymakers last month considered pausing interest rate increases after the failure of two regional banks and a forecast from Fed staff that banking sector stress would tip the economy into recession,” mentioned Reuters.

It’s worth noting that the latest comments from the Fed policymakers, including San Francisco Federal Reserve Bank President Mary Daly and Richmond Federal Reserve President Thomas Barkin, suggest easing inflation and challenges to the hawkish Fed, as well as for the US Dollar.

Elsewhere, firmer prices of Oil, India’s major import item, join the geopolitical fears emanating from China and North Korea to prod the USD/INR bears of late.

Amid these plays, US Dollar Index (DXY) remains pressured after falling the most in three weeks the previous day whereas S&P 500 Futures print mild gain while snapping a three-day downtrend. Further, the US Treasury bond yields remain indecisive at the latest. That said, the US 10-year Treasury bond yields snapped a three-day uptrend with mild losses to around 3.40% while the two-year counterpart also eased to 3.96% by marking the first daily negative in five.

Moving on, Friday’s India trade deficit numbers will join more clues of the US inflation and Fed talks to entertain USD/INR traders moving forward.

Technical analysis

USD/INR seesaws within a one-month-old symmetrical triangle, currently around 82.20 and 81.80.