INR/USD Pair Shows Mixed Performance Amid Fed Rate Cut Expectations and Trade Deficit Concerns

The Indian Rupee (INR) closed at 83.37 against the US Dollar (USD), marking a complex trading period influenced by a blend of domestic and international factors. Over the past week, the INR appreciated by 0.2% from 83.54 against the USD. A month ago, the INR was at 83.65, indicating a monthly gain of 0.33%.  However, the quarterly performance shows a different trend, with the INR weakening by 0.43% from 83.01 against the USD. On an annual basis, the INR has depreciated by 1.18%, down from 82.40 against the USD a year ago. The INR achieved its yearly high of 81.79 against the USD on July 24, 2023, but has since dropped by 1.93%. Conversely, it reached a yearly low of 83.65 against the USD on April 17, 2024, and has slightly recovered by 0.33% from this low. During the early European session on Thursday, the INR/USD pair edged higher, driven by an upward correction in the US Dollar. This move helped the pair recover from recent losses, despite the Greenback's depreciation amid growing expectations of multiple rate cuts by the Federal Reserve in 2024. The dovish outlook was reinforced by lower-than-expected US Consumer Price Index (CPI) and Retail Sales data. Domestically, India's trade deficit increased to $19.1 billion in April, exacerbated by lower exports and a surge in gold imports. This rising deficit, coupled with sustained foreign fund outflows, has exerted pressure on the INR, resulting in a range-bound trading pattern with a slight weakness bias. Despite these challenges, lower oil prices are poised to positively impact India's trade balance, as petroleum products constitute a significant portion of its import expenditure. This reduction in import costs is expected to offer some relief to the Indian economy and potentially support the INR in the near term. PolyMart does not provide any assurances or guarantees regarding the reliability, accuracy, completeness, or quality of the information available on its website, app, or through any of its services. Therefore, the company is not responsible for any errors, omissions, losses, or damages that may result from the use of the website or app. It is advisable for users to exercise caution and independently verify any information obtained from these sources before relying on it for any purpose.