ployment data reinforced the likelihood of no interest rate change by the Federal Reserve in the September meeting.
However, the bets are now on a 25 basis points rate hike in December, 2023. Additionally, Federal Reserve Bank of Cleveland President Loretta J. Mester advocated for the Fed’s hawkish tone and denied the odds of a bias toward rate cuts in a speech on Friday. Market participants await the US Factory Orders to gain clear insights into the inflation and economic scenarios.
Analysts at MUFG Bank anticipate that the USD/INR pair will remain at 82.70 by the end of the third quarter and then decline to 81.50 by the end of the first quarter of 2024. Their short-term outlook for the Indian Rupee is neutral. Analysts also mentioned some headwinds for the Indian Rupee in the near term due to the higher inflation recorded in July than anticipated. They also suggested that the Reserve Bank of India should hold the hawkish stance for a prolonged period.
The safe-haven Greenback was under pressure as improved market optimism due to China's stimulus measures and the agreement between Country Garden and creditors for an extension on onshore debt repayments worth 3.9 billion yuan . The positive sentiment in the market could support the Asian currencies including the Indian Rupee. Furthermore, Chinese Authorities plan to ease home-purchase restrictions to support economic growth.