Indian Rupee recovers some lost ground on Monday, despite the firmer US Dollar.
India's growth and inflation dynamics might convince the RBI to hold rates higher for longer.
The Indian HSBC Manufacturing PMI and US ISM Manufacturing PMI will be due on Monday.
Indian Rupee (INR) trades on a stronger note on Monday despite the stronger US Dollar (USD). The Reserve Bank of India (RBI) is expected to maintain a status quo on the monetary policy stance this week and is unlikely to change before the August 2024 MPC review until there is visibility on the monsoon turnout, the sustenance of the growth momentum and the US Federal Reserve’s (Fed) rate decisions," said Aditi Nayar, chief economist, Icra.
India’s foreign capital inflows have been strong, and the country's economic momentum is estimated to continue. While Fed officials hinted that benchmark rates would be cut in the coming months, India's growth and inflation dynamics suggest that the RBI may hold rates high for longer. This, in turn, might provide some support to the INR and create a headwind for the USD/INR pair.
The Indian HSBC Manufacturing Purchasing Managers Index (PMI) data will be published on Monday, which is estimated to remain steady at 59.2 in March. Also, the US ISM Manufacturing PMI will be released later in the day. Moving on, the RBI interest rate decision and the US March Nonfarm Payrolls, due on Friday, will be the highlights for this week.
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