- Protests against citizenship bill in India hurt INR.
- Industrial Production in US rose more than expected in November.
- US Dollar Index posts modest daily gains near 97.20.
After encountering stiff resistance several times since the start of the week near the 71 mark, the USD/INR pair gathered momentum and touched its highest level in a week at 71.068 on Tuesday. As of writing, the pair was up 0.2% on the day at 71.050.
Rupee remains on the back foot
Protest over India’s new citizenship bill continued on Tuesday to weigh on the INR. Commenting on the political unrest in the country, India’s Home Minister Amit Shah accused opposition parties of misleading people over the bill. “I am unable to understand why Muslims have a problem with the citizenship bill,” Shah said. “We want to assure that no Muslim in India will be bothered on the basis of the citizenship act.” Nevertheless, these remarks failed to help the INR.
In the meantime, dovish comments from Reserve Bank of India (RBI) Governor and MPC Chair Shaktikanta Das on Monday seems to be making it difficult for the currency to stage a recovery.
On the other hand, the data published by the Federal Reserve on Tuesday revealed that Industrial Production in the US expanded by 1.1% in November following October’s decline of 0.9% and beat analysts’ estimate of 0.8%. Moreover, the IBD/TIPP Economic Optimism Index improved to 57 in December from 52.9 in November. Supported by the upbeat data, the US Dollar Index rose to 97.20 area to reveal broad-based USD strength, which allows the pair to cling to its daily gains.
Technical levels to watch for
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