- The rupee weakened moderately against the USD this week, closing at 82.35 compared to 81.90 last week.
- It appreciated marginally against the EUR, moving from 88.80 to 88.50.
- GBP/INR saw a slight depreciation, with the rupee closing at 99.80 compared to 99.20.
- Global risk sentiment remained cautious, dominated by concerns about the ongoing war in Ukraine and its impact on commodity prices.
- Domestic inflation worries persisted, with January Consumer Price Index (CPI) data hitting a three-month high of 5.1%.
- FPI inflows continued but at a slower pace, raising questions about their sustainability.
- India's industrial output (IIP) for December 2023 grew by 3.8%, indicating a slowdown compared to previous months.
- Trade data for January is due next week, with expectations of a widening trade deficit due to higher import costs.
- Trade data for January (Feb 23rd)
- RBI monetary policy meeting (Feb 23rd)
- The rupee faced headwinds from global uncertainties and domestic inflation concerns, leading to a mild depreciation against the USD.
- RBI intervention likely helped limit the downside for the rupee.
- The upcoming trade data and RBI policy meeting will be key factors influencing the rupee's performance in the coming week.
- The RBI is likely to maintain its accommodative stance with a calibrated approach, balancing growth and inflation concerns.
- Global risk sentiment and central bank actions will continue to play a crucial role in determining the rupee's direction.
- FPI flows remain a key support factor, but their consistency is crucial for sustained rupee stability.
The rupee's outlook for the coming week remains cautious, with global headwinds and domestic uncertainties persisting. The RBI's policy decision and trade data will be closely watched by markets. While significant volatility is unlikely, choppy trading within a defined range is expected.
Disclaimer: This analysis is for informational purposes only and should not be considered as investment advice.
