Indian Rupee waits for fresh cues from the US Federal Reserve, which is scheduled to deliver its interest rate decision later this week. The Indian Rupee closed at 70.732 against the greenback at the end of the last week’s trading session. After, the Asia session, the Indian Rupee was trading slightly higher and was quoted at 70.588 against the US dollar.
Indian stock exchange will remain close on Monday due to holiday Diwali-Balipratipada. The NIFTY 50 settled at 11627, but it closed last week of trading activity slightly lower. Overall the domestic equity market has benefited from the surprise corporate tax cut delivered in September.
The corporate tax rate was lowered from 30% down to 22% to boost India’s faltering economy. Since the beginning of the year NIFTY 50 has posted a 9.3% growth. The 10-year government bond yield is also down more than -11.70% year-to-dates.
From the other side of the monetary policy spectrum, all eyes focus on the Fed interest rate decision which concludes on October 30. Foreign investors are expecting the US Federal reserve to deliver another rate cut of 0.25%. This will bring the target range for the funds rate down to 1.5% to 1.75%. Naturally, this should have a negative impact on the US dollar. This move, it’s likely to trigger more fund flow to the Indian equity market
USD/INR Technical Pattern
While the USD/INR exchange rate remains range-bound, it’s threatening to break below the key support level 70.350. This held the exchange rate higher since the beginning of August. A daily break and close below the 70.350 should open up the door for another attempt to break the psychological number 70.000. This aligns perfectly with the 200-day moving average.
The market is still waiting for a catalyst to motivate a break out of the current consolidation. The US Fed’s interest rate decision scheduled on Wednesday can be a source to disrupt the market volatility.