- The Indian Rupee may obtain its basis due to the expected development in a US-Indian trade agreement.
- USD/INR appreciates due to demand care of hedging and potential RBI dollars purchase intervention.
- INR struggles due to the improved crude oil prices, which are urged by OPEC+decision to promote production faster.
The edges of Indian Rupee (INR) were lower against the US dollar (USD) during Asian time on Tuesday. However, the USD/INR pair may continue to encounter resistance as INR support from several factors in the market. Investors are closely watching the federal reserve policy decision, along with any development in a US-Indian trade agreement and cross-border tensions.
The HSBC India Composite PMI arrived at 59.7 in April 2025, just below the Flash estimate of 60.0 but higher than 59.5 of March, which signed the -45 straight months of expanding the private sector. Meanwhile, PMI services have been modified up to 58.7 from the preliminary reading of 59.1. Despite the downward revision, it remained above the March figure and market expectations of 58.5, expanding the sector's growth in 45 consecutive months.
The downside for the USD/INR pair can be capped by the import of hedging demand and potential intervention purchasing the Dollar of the Reserve Bank of India (RBI). The Central Bank is expected to continue the strengthening of foreign exchange reserves, which increased for the eighth straight week, reaching more than six months high of $ 688 billion until April 25th.
In addition, the continued recovery to crude oil Prices put down pressure on INR because India is the third largest oil consumer. However, oil obtained were trapped by concerns over the increase in global supply following an OPEC+ decision to accelerate output increase. Last week, OPEC+, the organization of petroleum exporting countries and its allies, agreed to ramp up production for a second straight month, announcing an additional 411,000 barrels per day (BPD) increase for June.
Indian Rupee struggles as US dollars appreciate the predecessor of Fed's policy decision
- The US Dollar Index (DXY), which measures the US Dollar (USD) against a basket of six major currencies, is rebounding again after two consecutive losses sessions, trading near 99.80 at the time of writing.
- The US dollar is boosting the Federal Reserve (FED) policy announcement on Wednesday. While the Fed is widely expected to keep interest rates unchanged, markets closely watch Jerome Powell's comments, especially amid tariff-related uncertainty and pressure mounting from President Donald Trump for rate cuts.
- In front of the trade, Treasury Secretary Scott Bessent said Monday that the US was “very close to some deals,” citing commentaries over the weekend of Trump's week suggesting developing trade negotiations. However, Trump ruled a meeting with Chinese president Xi Jinping this week. China's commerce ministry said Friday that it was reviewing a US proposal to continue the conversation.
- US economic data showed strength in the service sector: The ISM Services PMI rose to 51.6 in April, defeating forecasts of 50.6 and up from 50.8 in March. The new order index rose to 52.3 from 50.4, while the work service index rose to 49 from 46.2.
- Entrepreneurs are expecting the 10-year bond of the Indian government to remain 6.30% -6.40% this week, with attention centered on bond purchases and geopolitical developments between India and Pakistan.
- The recent denial of the produce is driven by expectations of additional rates and the Reserve Bank of India (RBI) that maintains excessive liquidity in the banking system through ongoing open market operations (OMO), according to Reuters.
- This week, the RBI plans to buy bonds worth 750 billion ($ 8.88 billion), with two additional rotation of ₹ 250 billion per schedule next month. Year-to-date, the Central Bank gained ₹ 3.65 trillion on bonds by OMOS and ₹ 388 billion by secondary market purchase. The unexpected injection of this liquidity is likely to help transmit the policy and boost growth in the midst of global uncertainty, said Radgika Rao, Executive Director and Senior Economist at DBS Bank.
- Increasing tension between India and Pakistan can be weighed in the rupee of India. On Saturday, the Pakistan military announced that it had conducted a launch of the training of a surface-to-surface with a 450-kilometer. Meanwhile, New Delhi has accused Islamabad of supporting a recent attack on tourists in Kashmir.
- India's Rupee drew support from strong equity flows worth ₹ 2,769.81 crore. In addition, the recent launch of a new 10-year government bond with a 6.33% coupon has seen solid demand and achieved market expectations. The desirable response can encourage further foreign investment, further strengthening of rupee.
USD/INR rebounds from Descending Channel's Lower Boundary near 84.00
The Indian Rupee remains stable, with the USD/INR pair trading near 84.20 on Tuesday. Technical Assessment sun -day chart Indicates an ongoing bias, as the pairs are lower within a descending channel pattern.
On the downside, the USD/INR pair can try support near the lower border of the descending channel around 84.10. A decisive rest under this level could deepen the bearish momentum, which potentially driving a pair to eight months of less than 83.76.
Upside down, the initial resistance lies in the nine -day exponential transfer of the average (EMA) near 84.70. A breakout above this level can strengthen the short -term bullish momentum, opening the path to the upper border of the channel near 86.20, with additional resistance to two months high of 86.71.
USD/INR: Sun -Taral chart
Indian Rupee FAQs
Indian Rupee (INR) is one of the most sensitive currencies for external factors. The price of crude oil (the country is highly dependent on its imported oil), the value of the US dollar – most of the trade is conducted in the USD – and the level of investment in foreign, all is influenced. The direct intervention of the Reserve Bank of India (RBI) in the FX markets to maintain the exchange rate, as well as the level of interest rates set by the RBI, is more primarily influential factors in Rupee.
The Reserve Bank of India (RBI) is actively intervening in the forex markets to maintain a stable exchange rate, to help facilitate trade. In addition, the RBI is trying to maintain the inflation rate at its 4% target by organizing interest rates. Higher interest rates usually strengthen rupee. This is due to the 'trade -carrying' role in which investors borrow in countries with lower interest rates to put their money in countries that offer relatively higher interest rates and income from the difference.
Macroeconomic factors that influence rupee value include inflation, interest rates, economic growth rate (GDP), trade balance, and flow from foreign investment. A higher growth rate can lead to more investment abroad, which drives demand for rupee. A less negative trade balance will eventually lead to a stronger rupee. Higher interest rates, especially real rates (interest rates below inflation) are also positive for rupee. A risk-on environment can lead to greater flow of foreign direct and indirect investment (FDI and FII), which also benefits Rupee.
Higher inflation, in particular, if it is a bit higher than that of Indian peers, it is generally negative for money because it reflects lowering through oversupply. Inflation also increases the cost of exports, leading to more rupees sold to buy foreign imports, which are rupee-negative. At the same time, higher inflation usually leads to the Reserve Bank of India (RBI) that increases interest rates and can be positive for Rupee, due to increased demand from international investors. The opposite effect is true of lower inflation.
