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The USD/INR cross traded above 83.20 during Monday’s Asian session. The conflict between Palestinian Hamas and Israel continues, WTI oil prices are rising, and the Indian rupee may face challenges.
However, investors expect the Reserve Bank of India (RBI) to intervene to prevent further depreciation of the Indian rupee. The RBI has been actively intervening in the spot and non-deliverable forward (NDF) markets to prevent the Indian rupee from depreciating below its historic low of 83.29.
Separately, the Indian government’s September trade deficit fell to a five-month low of $19.37 billion on Friday, compared with market expectations of $23.25 billion. India’s trade deficit was $24.2 billion in August. Foreign exchange reserves fell to $584.74 billion from $586.91 billion in the week ended October 6.
The U.S. Dollar Index fell slightly to around 106.50. U.S. economic data released last week was strong, with inflation coming in higher than expected and U.S. initial jobless claims coming in lower than expected last week, giving the dollar a boost.
However, the preliminary reading of the U.S. Michigan Consumer Confidence Index for October showed a downward trend. Friday’s data showed that the preliminary reading of the U.S. Michigan Consumer Confidence Index for October fell to 63.0 from the previous reading of 68.1, below expectations of 67.4.
In addition, the U.S. dollar continued to be supported by safe-haven demand amid escalating geopolitical tensions between Israel and Palestine. U.S. officials have been in talks with Israel about a possible visit by President Joe Biden to Israel, Reuters reported, citing an unidentified source. Israeli Prime Minister Benjamin Netanyahu has reportedly extended an invitation for the visit.
