India PMI Shows Strong Expansion; Commerzbank Says PMI Strength Provides Support for INR
India’s composite Purchasing Managers’ Index (PMI) for February 2025 came in at 58.7, with manufacturing at 59.2 and services at 58.4, marking the 24th consecutive month above the 50 expansion threshold. New orders rose to 60.1 and the future output index reached 64.2, indicating sustained demand and elevated business confidence. Employment indices improved to 54.8. Commerzbank’s emerging markets team, led by Ulrich Leuchtmann, argues these PMI readings create a ‘fundamental floor’ for the Indian rupee (INR), reducing rupee volatility — historically about 0.8% lower for each 1-point sustained PMI rise. Despite these strong fundamentals, the INR has depreciated ~4.2% year-to-date vs the USD due to external pressures: US rate-driven capital outflows (net portfolio outflows of $3.2bn Jan–Feb 2025) and a widening trade deficit ($22.8bn in Feb 2025). RBI’s repo rate remains at 6.50%, supporting carry trade interest-rate differentials. Commerzbank highlights that when India’s composite PMI exceeds ~58.0, the rupee shows reduced volatility, suggesting medium-term support around 83.50/USD. Implications for traders: monitor PMI and capital flows — strong PMI points to medium-term rupee resilience and reduced probability of RBI easing, but short-term FX moves remain sensitive to US monetary policy, oil prices and portfolio flows. (Keywords: India PMI, Indian rupee, INR, PMI data, Commerzbank, RBI, capital flows, trade deficit)
Neutral
The news is categorized as neutral for the cryptocurrency market. The report centers on India’s strong PMI and its supportive effect on the Indian rupee and FX markets — macro developments that indirectly affect crypto rather than directly moving crypto fundamentals. Strong PMI and a hawkish RBI reduce the likelihood of domestic monetary easing, supporting INR carry trades and potentially diverting some yield-seeking capital away from crypto in the short term. Conversely, improved economic activity and business confidence can increase local risk appetite and institutional demand over the medium term, which could benefit crypto adoption and trading volumes. Historical parallels: episodes where emerging-market strength and higher local rates reduced crypto inflows (e.g., prior EM rate-tightening cycles) produced short-term downside pressure on crypto, but medium-term demand resumed as growth translated into higher local liquidity. Traders should expect: short-term potential pressure on crypto risk assets if INR stabilizes and yields attract capital away from crypto; medium-term neutral-to-slightly-bullish tailwinds if sustained growth lifts onshore demand and institutional participation. Key variables to watch: US rate moves, portfolio flows, oil price shocks, and RBI policy changes — any of which could flip the near-term impact to bearish or bullish for crypto.