Indian Rupee holds its range against US Dollar as oil lends support – Commerzbank

Steady expansion in domestic PMI readings forms the backdrop to Commerzbank’s FX assessment, with USD/INR trading slightly lower at around 94.90 and remaining close to the bottom of its six-month 94–97 range. The team argues that the recent decline in oil prices could underpin the Indian Rupee, helping to hold USD/INR near the lower end of that band.

USD/INR holds near the bottom of its range

"The final reading for October manufacturing PMI slipped to 54.7 after hitting a six-month high of 55.1 in September. It was also down from the year-ago reading of 59.2. Nevertheless, it remained in healthy expansion territory even though the pace of expansion moderated. "

"The export sector remained a key driver as new export orders expanded at their fastest pace in six months. At the same time, input cost pressures eased, which provided some reprieve for manufacturers."

"Manufacturers raised selling prices slightly to protect their margins, but the increase was modest and the slowest in four years. Employment demand from manufacturers increased for the second consecutive month. On the outlook, nearly 18% of manufacturers said they expect output to increase over the next 12 months."

"Overall, the latest report points to a continued steady expansion in manufacturing. We will get the final report for the services PMI tomorrow. The preliminary report for October posted a strong reading of 56.2."

"For USD/INR, it was slightly lower yesterday at around 94.90. It continues to hold at the lower end of the 94-97 range over the past six months. The drop in oil prices could also provide support for INR and keep USD/INR at the lower end of the range."

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