Commerzbank’s FX team notes USD/INR traded slightly lower around 94.90, continuing to hold near the lower end of its established 94–97 range over six months. The report argues that the recent drop in Oil prices could support the Indian Rupee and help keep USD/INR anchored toward the bottom of this band, in line with steady domestic PMI expansion.

Pair anchored near range lows

“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.”