USD/INR weakens on US government shutdown, RBI maintains Repo Rate at 5.5%
- The Indian Rupee gains against the US Dollar to near 88.80 after the RBI kept the Repo Rate steady at 5.5%, as expected.
- The RBI raises GDP forecasts for the current year to 6.8%.
- US government shutdown risks keep the US Dollar on the back foot.
The Indian Rupee (INR) attracts bids against the US Dollar (USD) following the Reserve Bank of India's (RBI) monetary policy announcement. The USD/INR pair falls to near 88.80 as the RBI has kept the Repo Rate steady at 5.5%, as expected, citing that the impact of the front-loaded monetary policy actions and the recent fiscal measures are still playing out.
Financial market participants had already anticipated that the RBI would maintain the status quo, as it would need to perform a delicate balancing act between Goods and Services Tax (GST) cuts and dampening the export market.
India’s export sector has been hit badly since the increase in tariffs to 50% on imports from New Delhi to the United States (US). President Donald Trump raised the import duty on Indian products as a penalty for buying Oil from Russia.
Meanwhile, RBI Governor Sanjay Malhotra has also warned that higher US tariffs would slow down the Indian export market. “Higher tariffs are likely to moderate export growth,” Malhotra said in the monetary policy statement.
With the GST cuts announcement in effect, the RBI has raised the Gross Domestic Product (GDP) forecast for the current financial year to 6.8% from 6.5% projected earlier. The RBI has stated that it will continue to maintain a “neutral” stance on interest rates and has revised the headline inflation forecast for FY2026 downwards from 3.1% to 2.6%.
US ADP Employment data to influence expectations for Fed's policy outlook
- The US Dollar trades cautiously against its peers on the US government shutdown, as Democrats have not supported the short-term funding bill, which was expected to extend the shutdown deadline to November 21.
- At the time of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, posts a fresh weekly low near 97.45.
- On Tuesday, US President Donald Trump said, while addressing reporters at the White House, “We’ll probably have a shutdown.” He also warned that Democrats would bear the consequences, as he has the power to cut benefits favourable for them during the shutdown. However, Trump didn’t specify any action he is considering now. “They’re taking a risk by having a shutdown. We can do things during the shutdown that are irreversible, that are bad for them,” Trump said, Time Magazine reported.
- The partial shutdown of the US government could halt key economic releases, including the official employment data for September, which has been a key trigger to speculation for the Federal Reserve’s (Fed) monetary policy outlook.
- With uncertainty over whether the US Labour and Commerce departments will release key labor market data this week, the significance of the ADP Employment Change data for September, publishing at 12:15 GMT, has increased. Economists expect the US private sector to have added a fresh 50K workers, marginally lower than 54K in August.
- Signs of a slowdown in the job market would boost market expectations for more interest rate cuts by the Fed. On the contrary, upbeat labor data would weaken the same. According to the CME FedWatch tool, there is a 94.6% chance that the Fed will cut interest rates again in the policy meeting later this month.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | INR | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.05% | -0.16% | -0.46% | 0.05% | 0.00% | -0.16% | 0.12% | |
| EUR | -0.05% | -0.20% | -0.50% | 0.00% | -0.03% | -0.25% | 0.07% | |
| GBP | 0.16% | 0.20% | -0.30% | 0.20% | 0.17% | -0.01% | 0.27% | |
| JPY | 0.46% | 0.50% | 0.30% | 0.53% | 0.44% | 0.26% | 0.68% | |
| CAD | -0.05% | -0.01% | -0.20% | -0.53% | -0.05% | -0.27% | 0.06% | |
| AUD | 0.00% | 0.03% | -0.17% | -0.44% | 0.05% | -0.23% | 0.10% | |
| INR | 0.16% | 0.25% | 0.01% | -0.26% | 0.27% | 0.23% | 0.32% | |
| CHF | -0.12% | -0.07% | -0.27% | -0.68% | -0.06% | -0.10% | -0.32% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Technical Analysis: USD/INR stays above 20-day EMA
USD/INR falls to near 88.80 on Wednesday. However, the near-term trend of the pair remains bullish as the 20-day Exponential Moving Average (EMA) slopes higher around 88.50.
The 14-day Relative Strength Index (RSI) stays above 60.00, suggesting a strong bullish momentum.
Looking down, the 20-day EMA will act as key support for the major. On the upside, the round figure of 90.00 would be the key hurdle for the pair.
Economic Indicator
ADP Employment Change
The ADP Employment Change is a gauge of employment in the private sector released by the largest payroll processor in the US, Automatic Data Processing Inc. It measures the change in the number of people privately employed in the US. Generally speaking, a rise in the indicator has positive implications for consumer spending and is stimulative of economic growth. So a high reading is traditionally seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.
Read more.Next release: Wed Oct 01, 2025 12:15
Frequency: Monthly
Consensus: 50K
Previous: 54K
Source: ADP Research Institute
Traders often consider employment figures from ADP, America’s largest payrolls provider, report as the harbinger of the Bureau of Labor Statistics release on Nonfarm Payrolls (usually published two days later), because of the correlation between the two. The overlaying of both series is quite high, but on individual months, the discrepancy can be substantial. Another reason FX traders follow this report is the same as with the NFP – a persistent vigorous growth in employment figures increases inflationary pressures, and with it, the likelihood that the Fed will raise interest rates. Actual figures beating consensus tend to be USD bullish.
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.
