Commerzbank notes that the USD/INR pair fell 0.2% to 95.20 on Friday, but still gained 0.9% during the week, remaining in the 94-96 range. The bank links India’s macroeconomic situation to lower oil prices, which should support demand and moderate inflation, while feeble monsoon conditions pose a downside risk to growth and could cause the RBI to remain cautious.
Range trading involves upside risk
“HSBC’s final services PMI was little changed in June at 57.4 (provisional: 57.3), down from 59.8 in May and the weakest reading in 17 months. The composite PMI also fell to 57.1 from 59.3, pointing to weaker activity in both the manufacturing and services sectors.”
“The loss of momentum appears to reflect the temporary impact of higher fuel prices in the wake of the Middle East conflict, weaker household purchasing power and below-normal monsoon rainfall.”
“Encouragingly, export demand remained resilient, reaching a three-month high, while inflation in input costs and finished goods prices declined as geopolitical disruptions abated and oil prices fell.”
“Looking ahead, lower oil prices should help support domestic demand and ease inflationary pressures, although continued monsoon weakness remains a major risk to growth and could keep the RBI unchanged for longer.”
“USD/INR fell 0.2% to 95.20 last Friday but gained 0.9% during the week. Still trading in the range of 94-96.”
(This article was created with the aid of an artificial intelligence tool and has been reviewed by an editor.)
