India’s manufacturing sector showed signs of cooling in June as the final Purchasing Managers’ Index was revised down to 54.2, representing the second-weakest expansion rate in four years. Commerzbank analysts highlighted broad-based moderation across key components including output, new orders, and employment figures. While the reading still indicates expansion above the 50 threshold, the downward revision signals slowing momentum in Asia’s third-largest economy.
The softer manufacturing data strengthens expectations that the Reserve Bank of India will maintain its current monetary policy stance rather than pursuing additional tightening measures. Traders should anticipate a hold position from the RBI as policymakers balance inflation concerns against signs of economic deceleration. The Indian rupee may face headwinds as weaker economic data typically dampens currency strength, though the impact could be limited given the reading remains in expansion territory.
FXnCO Insight
Position for RBI policy hold at the next meeting and watch for rupee volatility as manufacturing momentum slows while remaining technically expansionary.
Source: FXStreet