Anna 
The Indian Rupee (INR) displayed resilience on Monday, trading on a stronger footing even in the face of a robust US Dollar (USD). Market sentiment remains buoyed by expectations that the Reserve Bank of India (RBI) will maintain its current monetary policy stance during this week’s meeting, with no changes anticipated until the August 2024 MPC review. Aditi Nayar, Chief Economist at Icra, emphasized the importance of factors such as monsoon turnout, sustained growth momentum, and decisions from the US Federal Reserve (Fed) in influencing the RBI’s stance.
Foreign capital inflows into India have remained robust, supporting the country’s economic momentum. Despite indications from Fed officials regarding potential rate cuts in the coming months, India’s growth and inflation dynamics suggest that the RBI may opt to keep rates elevated for a longer duration. This stance could offer support to the INR and pose a challenge for the USD/INR pair.
Later in the day, market participants will turn their attention to the release of the US ISM Manufacturing PMI. Additionally, on Tuesday, the Indian HSBC Manufacturing Purchasing Managers Index (PMI) data for March is expected to be published, with estimates indicating stability at 59.2. Looking ahead, the highlights for the week include the RBI’s interest rate decision and the release of the US March Nonfarm Payrolls on Friday. These events are likely to shape market sentiment and influence currency movements in the days to come.
