- The rupee ended the week marginally weaker against the USD, closing at 81.90 compared to 81.75 last week.
- It appreciated against the EUR, moving from 89.50 to 88.80.
- GBP/INR saw a slight depreciation, with the rupee closing at 99.20 compared to 98.80.
- Global risk sentiment remained mixed, with concerns about Fed tightening offset by hopes of an improving Chinese economy.
- Domestic inflation data came in slightly above expectations, putting pressure on the RBI to remain hawkish.
- FPI inflows continued but at a slower pace, raising concerns about their sustainability.
- India's retail inflation stood at 5.69% in December 2023, This figure remained within the RBI's target band of 2-6%.
- Industrial output grew by 4.9% in December, indicating a slowdown compared to previous months.
- IIP data for January and trade data for February are due next week.
Macro Updates - Global Central Banks:
- ECB: Maintained interest rates unchanged, signaling a cautious approach despite rising inflation concerns.
- FOMC: Held rates steady but adopted a hawkish tone, indicating potential for faster rate hikes in the coming months.
- BoE: Kept rates unchanged but hinted at further tightening if inflationary pressures persist.
- IIP data for January (Feb 6)
- Trade data for February (Feb 9)
- The rupee remained relatively stable despite volatile global markets, reflecting RBI's intervention and some positive domestic data.
- Inflation concerns and slowing growth pose challenges for the RBI's monetary policy stance.
- FPI flows need to remain consistent for sustained rupee stability.
- Global central bank actions, particularly the Fed's hawkish stance, will continue to influence the rupee's movement.
- The RBI's upcoming monetary policy meeting on February 8th will be keenly watched for any changes in stance.
- The Russia-Ukraine conflict and global oil prices continue to be key risks for the rupee.
The rupee's outlook for the coming week remains uncertain. While domestic data points are mixed, global factors, especially the Fed's tightening stance, will likely play a bigger role. Cautious optimism is warranted, but close monitoring of key events and data releases is necessary.
Disclaimer: This analysis is based on publicly available information and does not constitute financial advice. Please consult with a qualified financial professional before making any investment decisions.
