Indian Rupee tumbles due to FIIs selling, rising oil prices

The Indian Rupee declines at open against the US Dollar as oil prices extend recovery.
FIIs have remained net sellers in the first two trading days of June.
Economists expect the RBI to hold the Repo Rate steady on Friday.

Sagar Dua FXStreet

The Indian Rupee (INR) falls sharply against the US Dollar (USD) on Wednesday.

The USD/INR pair jumps to near 95.78 as oil prices extend recovery due to renewed hostilities in the Middle East region, and the continuous outflow of foreign funds from the Indian stock market.

At press time, the WTI Oil price trades 1.4% higher to near $93.00, the highest level seen in over a week. Oil prices started recovering from May 29, following the announcement of revisions by United States (US) President Donald Trump in the agreement provided to Iran for a permanent ceasefire.

Currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs, tend to underperform in a high oil price environment.

Meanwhile, a report from Reuters has stated that the Indian central bank is likely selling US Dollars to limit the Indian Rupee's losses.

Renewed US-Iran tensions boost oil prices

Late Tuesday, the US Central Command (CENTCOM) said that it had intercepted and defeated a series of Iranian missile and drone attacks targeting regional neighbors, including Kuwait and Bahrain, while also carrying out self-defense strikes on Iran’s Qeshm Island in the Strait of Hormuz, renewing fears of a war resumption in the Middle East.

This came at a time when US President Donald Trump announced, through a post on Truth Social earlier this week, that Israeli Prime Minister (PM) Benjamin Netanyahu won’t attack Lebanon, and there will be no strikes between them after several Iranian officials warned attacks on Lebanon are non-compliant with the ceasefire.

FIIs turned out net sellers on Tuesday

Renewed uncertainty over the US-Iran deal has prompted caution among overseas investors toward the Indian stock market. On Tuesday, Foreign Institutional Investors (FIIs) sold a significant amount of shares worth Rs. 8,362.92 crore. FIIs were also net sellers on the first day of June on Monday, in which they offloaded their stake worth Rs. 3,911.68 crore.

RBI’s monetary policy in focus

The three-day Reserve Bank of India (RBI) policy meeting has started, and it will announce the monetary policy on Friday. According to a PTI poll, 11 respondents expect the RBI to maintain the repo rate at current levels in the June policy review, while four foresee a 25-basis-point (bps) increase, The Times of India (ToI) reported.

Investors will pay close attention to RBI Governor Sanjay Malhotra’s comments on the economic and inflation outlook.

The same day, India’s Q1 Gross Domestic Product (GDP) data will also be published, which is expected to arrive lower at 7.2% from the previous reading of 7.8%.

Technical Analysis: USD/INR returns above 20-day EMA

USD/INR trades higher at around 95.77 on Wednesday. The near-term trend of the pair appears to be turning bullish as it has returned above the 20-day Exponential Moving Average (EMA), which is at 95.43. The positioning of price over this dynamic support suggests buyers retain control, while the Relative Strength Index (RSI) around 54.9 stays in neutral territory, hinting at steady rather than overheated upside momentum.

On the downside, initial support is defined by the 20-day EMA at 95.43, where a break could open the door to a deeper correction toward the May 29 low at 94.46, followed by the May 07 low at 94.03. Looking up, the pair could hope to reclaim the all-time high of 97.09 if it manages to extend its recovery above the June 2 high at 96.19.

(The technical analysis of this story was written with the help of an AI tool.)

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

USD/JPY eyes August swing low, near 155.20 ahead of US NFP

USD/JPY retests the August monthly swing low during the Asian session on Friday as a more hawkish repricing of BoJ rate-hike bets and a suspected intervention continue to underpin the Japanese Yen. Meanwhile, the US Dollar is seen consolidating the previous day's heavy losses amid soft US bond yields, further weighing on the currency pair as traders keenly await the US NFP report.

AUD/USD consolidates above 0.7200; US NFP awaited

AUD/USD holds steady above 0.7200, near its highest level since mid-May, as bulls await the US NFP report for more cues on the Fed's policy path before placing fresh bets. Meanwhile, the recent decline in US bond yields keeps the US Dollar depressed near its lowest level in over a week and acts as a tailwind for the Aussie amid the RBA's hawkish tilt.

Gold bulls seem hesitant below $4,500 amid modest USD bounce ahead of US NFP

Gold remains on the defensive below the $4,500 mark through the Asian session, snapping a two-day winning streak amid a modest US Dollar uptick. The commodity, however, remains close to the weekly high, which it touched the previous day, as traders keenly await the release of the closely watched US monthly employment details. The popularly known US Nonfarm Payrolls (NFP) report will provide more cues about the Fed's policy path amid receding bets of a September rate hike.

Bitcoin clears $80,000 on reduced rate hike odds – Zcash, Ethena rise

Bitcoin is trading above $80,000 on Friday, sustaining the broader cryptocurrency market's risk-on sentiment. Federal Reserve (Fed) Governor Christopher Waller signaled support for a potential pause in interest rates on Thursday, lowering the odds of a September rate hike to 50%. Zcash (ZEC) and Ethena (ENA) emerge as top performers over the last 24 hours.

NFP preview: Can jobs data ease rate hike fears?

As we move to the end of the week, the focus shifts to the macro data, and to the strength of the labour market in the US. August payrolls are released on Friday at 1330 BST, and the market is expecting a reading of 58k. The unemployment rate is expected to remain steady at 4.1% and wage growth is expected to moderate slightly to 3% last month, down from 3.2%.

Diesel’s record $100 warning: The oil shock hiding in plain sight

The Oil market may look calmer than it did a few months ago, but diesel is sending a very different message. The US diesel crack spread, the premium of ultra-low sulphur diesel futures over WTI, recently surged above $100 per barrel for the first time, reaching an intraday record of just over $102.00.