Indian Rupee: Softer PMI supports RBI hold – Commerzbank

Commerzbank analysts note India’s final June manufacturing Purchasing Managers' Index (PMI) was revised down to 54.2, marking the second-slowest expansion in four years, with broad moderation across output, orders and employment. They highlight easing input and output price pressures, reinforcing expectations that the Reserve Bank of India (RBI) will stay on hold while monitoring data. USD/INR climbed 0.6% to 95.25, near the top of its recent 94–96 range.

India manufacturing slowdown and Rupee

"The final HSBC manufacturing PMI was revised slightly lower to 54.2 from the flash estimate of 54.5, down from 55.0 in May. The reading marked the second-slowest expansion in four years, exceeded only by March's print during the height of the Middle East conflict."

"The details pointed to a broad-based moderation in activity. Output, new orders, export orders and employment all eased, with capital goods producers leading the slowdown."

"Despite the softer details, the broader picture remains encouraging. The PMI remained comfortably above the 50-point threshold, underscoring the continued resilience of India's manufacturing sector despite global uncertainties."

"The combination of softer demand and easing price pressures should reinforce the RBI's preference to remain on hold while monitoring incoming data. Overall, the report suggests manufacturing activity is normalising following the strong pace seen earlier this year, rather than signalling a material deterioration in underlying momentum."

"In FX, USD/INR rose 0.6% yesterday to 95.25, remaining near the upper end of the 94–96 range that has prevailed over the past month."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)