Due to a lack of signals on both the domestic and international fronts, the rupee’s volatility is still modest. In the domestic arena, the rupee was sustained and its gains throughout the intraday session were reinforced by flows relating to the initial public offering. Simultaneously, the rupee received assistance from the dollar index’s decline. The lack of significant domestic economic data also contributed to the rupee’s lack of volatility. Prior to the FOMC meeting minutes, which revealed that all attendees felt the Committee was in a position to proceed cautiously, the dollar increased in the middle of the week.
The minutes also stated that participants felt tightening of monetary policy would be appropriate in the event that new evidence showed inadequate progress towards the Committee’s inflation target. Gains were, however, limited when US data revealed that orders for durable goods had shrunk by 5.4%, compared to a growth of 4.6% the month before.
Although there are no significant economic reports due to be revealed this week domestically, market players are nonetheless wary ahead of the Reserve Bank of India’s policy statement, which is set to be made in the first week of December.
Although it is anticipated that the central bank will hold rates, commentary is expected to give clues to the currency, which has remained steady over the past few weeks. The rupee could be impacted by any significant remarks made about inflation and economic expansion.
Following vigorous RBI intervention, local currency volatility has been contained. According to the most recent data issued by the RBI, reserves decreased by $462 million to a total of $590.32 billion. The USDINR(Spot) may quote between 83.05 and 83.50 and continue to trade sideways, in our opinion.
In contrast, it is anticipated that the services PMI would increase from 49.5 in October to 50.5 in November. The pound may rise in response to rumours indicating that the central bank will postpone discussing rate decreases due to concerns about inflation rising due to geopolitical unrest in the Middle East.
The US consumer confidence index, preliminary GDP, core PCE index, and manufacturing PMI statistic will be crucial to follow this week. Surprisingly strong economic data is anticipated to maintain the dollar’s strength at current levels. The final manufacturing statistic from the UK and preliminary inflation and final manufacturing PMI from the EZ will be crucial to monitor and establish a view for the major crosses.
