- Indian Rupee holds positive ground on the modest decline in the USD.
- RBI’s Das said that it’s too early to talk about rate cuts until the 4% inflation target is achieved on a sustained basis.
- Investors will monitor the preliminary US Michigan Consumer Sentiment Index for January for fresh impetus.
Indian Rupee (INR) gains traction on Friday amid a modest decline in the US Dollar (USD). However, the INR’s upside might be capped due to the rise in US Treasury bond yields after the upbeat US economic data. Furthermore, the rebound in oil prices amid the geopolitical tension in the Red Sea might also weigh on the Indian Rupee as the country is the third largest consumer of crude oil in the world.
Reserve Bank of India (RBI) Governor Shaktikanta Das said on Thursday in Davos that it would be premature to talk about cuts in the key policy rate until the inflation target is achieved on a durable basis. When asked whether a rate cut was possible in the second half of 2024, RBI’s Das said that average inflation is estimated to reach 4.5% in fiscal years 2024–25 and it would depend on many factors. He further stated that the central bank’s focus is to remain actively disinflationary and lower CPI inflation to 4% on a sustained basis.
Later on Friday, the preliminary US Michigan Consumer Sentiment Index and Existing Home Sales will be due. FOMC members M. Daly (San Francisco) and M. Barr (Board of Governors) are scheduled to deliver speeches. The stronger-than-expected US economic data, along with Fed officials pushing back on rate expectations, could exert some selling pressure on the Indian Rupee.
Daily Digest Market Movers: Indian Rupee seems vulnerable amid multiple headwinds
- India is estimated to grow by at least 7% in 2024–25, higher than what the RBI forecast in December, according to the Reserve Bank of India’s (RBI) January bulletin.
- The RBI’s Bulletin highlights the shift from consumption to investment as a key factor driving India’s economic growth.
- Das said that Consumer Price Index (CPI) inflation has decreased from a peak of 7.8% amid the Ukraine-Russia conflict to within the RBI’s target range of 2–6%.
- The US weekly Initial Jobless Claims fell to 187K for the week ended January 13 from the previous reading of 203K, stronger than the market expectation of 207K.
- The total for continuing claims hit 1.806 million, better than the 1.845 million expected.
- The Philadelphia Fed Manufacturing Survey improved to -10.6 in January from -12.8 in December.
- Atlanta Federal Reserve (Fed) President Raphael Bostic anticipates that policymakers will start cutting interest rates in the third quarter of this year, as inflation is approaching the central bank’s target.
- The Fed Funds futures market is pricing in 57% odds of the first rate cuts as early as March, according to the CME FedWatch tool.
Technical Analysis: Indian Rupee keeps trading range-bound between 82.80 and 83.40
Indian Rupee trades firmly on the day. The USD/INR pair remains traded in a familiar multi-month-old trading band between 82.80 and 83.40. USD/INR holds above the key 100-period Exponential Moving Average (EMA) on the daily chart. However, the 14-day Relative Strength Index (RSI) hovers around the 50.0 midline, indicating directionless in the near term.
The first upside barrier will emerge near the upper boundary of the trading range at 83.40. Any follow-through buying will pave the way to a 2023 high of 83.47, followed by the 84.00 round figure. On the flip side, the initial support level is seen at the 83.00 psychological mark. A decisive break below 83.00 will expose 82.80 (the lower limit of the trading range, low of January 15), and finally at 82.60 (low of August 11).
US Dollar price in the last 7 days
The table below shows the percentage change of US Dollar (USD) against listed major currencies in the last 7 days. US Dollar was the weakest against the Pound Sterling.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.91% | 0.60% | 0.84% | 1.87% | 2.42% | 2.33% | 2.02% | |
| EUR | -0.91% | -0.31% | -0.08% | 0.96% | 1.52% | 1.41% | 1.13% | |
| GBP | -0.60% | 0.32% | 0.25% | 1.27% | 1.84% | 1.74% | 1.44% | |
| CAD | -0.85% | 0.07% | -0.24% | 1.01% | 1.60% | 1.50% | 1.19% | |
| AUD | -1.90% | -0.97% | -1.28% | -1.04% | 0.57% | 0.45% | 0.18% | |
| JPY | -2.46% | -1.55% | -1.86% | -1.63% | -0.56% | -0.12% | -0.40% | |
| NZD | -2.39% | -1.43% | -1.75% | -1.53% | -0.46% | 0.10% | -0.29% | |
| CHF | -2.07% | -1.14% | -1.46% | -1.21% | -0.16% | 0.40% | 0.31% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Davos 2024 FAQs
The World Economic Forum (WEF) is a not-for-profit organization that brings together global leaders from commerce, academia, philanthropy, and politics in an annual meeting in Davos, Switzerland, with the aim of jointly solving the global economic, social, and political challenges of the day. The WEF was started by Economist Klaus Schwab in 1971. The principle of stakeholder capitalism, in which corporations are not just accountable to shareholders but also to the wider public and the environment, is central to the WEF’s ethos, as is the use of Public-Private Partnerships (PPP) to achieve better outcomes.
In the words of the organizers, one of the major themes of Davos 2024 is “Rebuilding Trust,” which relates primarily to finding solutions to geopolitical fractures, such as the conflicts in Gaza and Ukraine. Another key theme is that of how AI can be a driving force for the economy and society. Hammering out a long-term strategy for climate and energy is high on the list of priorities, as is facing the threat of a potential economic slowdown.
The World Economic Forum’s board of trustees are drawn from all four corners of the globe. They consist of leaders from the worlds of business, politics, academia, philanthropy, the arts, and civil society. These include the CEOs of major corporations, heads and former heads of state, professors, and musicians to name but a few.
The World Economic Forum’s (WEF) main achievements have probably been in the realm of conflict resolution. The “Davos Declaration” of 1988 prevented the outbreak of a war between Greece and Turkey. The WEF led to the first ministerial-level meeting between North and South Korea. Davos was the meeting place for the first face-to-face meeting between Nelson Mandela and South African President F.W. de Klerk, which started off the dismantling of apartheid, and it sowed the seeds of the “Cairo Agreement” between Israel and Palestine in 1994.
Davos has been criticized for being a meeting of the elite that disenfranchises poorer nations through the promotion of global capitalism. It has been criticized for not representing the very stakeholders it purports to support, nor including in discussions those most affected by the problems being tackled by the World Economic Forum. Two examples are developing countries and lower-income groups. Other criticisms are that it is not sufficiently diverse and is merely a “talking shop” devoid of action and relevance.
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