USD/INR loses momentum as likely RBI intervention caps gains

The Indian Rupee (INR) edges higher on Thursday. The Reserve Bank of India (RBI) likely played a key role by conducting dollar-rupee swaps to manage liquidity and support the Indian Rupee. Lower crude oil prices might help limit the INR’s losses as India is the world's third-largest oil consumer.

Nonetheless, the continued selling by Foreign Institutional Investors (FIIs), US Dollar (USD) demand from importers and global uncertainties continue to undermine the local currency. Investors brace for the US weekly initial Jobless Claims data, which is due later on Thursday. On Friday, the preliminary reading of HSBC India’s Purchasing Managers Index (PMI) and US S&P PMI data for January will be in the spotlight. 

Indian Rupee rebounds amidst persistent global uncertainties

• "Rupee opened lower because dollar index was up. But good inflows from HSBC possibly related to us joining the Bloomberg index has brought dollar rupee down," said Anil Kumar Bhansali, Head of Treasury and Executive director at Finrex Treasury Advisory LLP.
• The Securities and Exchange Board of India (SEBI) has proposed that fund houses launch sachet-sized investment plans. The objective is to "promote financial inclusion, inculcate the habit of systematic saving, and facilitate investment of small savings by investors new to the Mutual Fund space,” noted SEBI.
• India is likely to raise major subsidies by 8% year-on-year to 4.1 trillion rupees ($47.41 billion) in the next fiscal year, government sources said. 
• Indian Finance Minister Nirmala Sitharaman will present the national budget on February 1, amid slowing growth in Asia's third-largest economy and rising global uncertainties.
• Foreign investors have sold a net total of about $6.5 billion worth of local equities and bonds in January, the largest monthly outflow since October 2023.

USD/INR keeps the bullish vibe in the longer term

The Indian Rupee trades in positive territory on the day. The constructive outlook of the USD/INR pair remains intact as the price has formed higher highs and higher lows while holding above the key 100-day Exponential Moving Average (EMA) on the daily chart. Furthermore, the 14-day Relative Strength Index (RSI) stands above the midline near 67.30, suggesting that the support is likely to hold rather than break. 

The key resistance level for the pair emerges at an all-time high of 86.69. Sustained bullish momentum above this level could pave the way for a rally to the 87.00 psychological mark.

On the other hand, any follow-through selling below 86.18, the low of January 20, could expose 85.85, the low of January 10. The additional downside filter to watch is 85.65, the low of January 7.