USD/INR gains further as higher oil prices drag Indian Rupee

The Indian Rupee (INR) extends its losing streak for the fourth trading day against the US Dollar (USD) on Thursday. The USD/INR pair jumps to near 94.15, the highest level seen in over a week, as higher oil prices due to the closure of the Strait of Hormuz, a critical passage to almost 20% of global energy supply, continue to keep the Indian Rupee under pressure.

During the press time, the WTI Oil price is up over 1.5% above $93.50. Theoretically, currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs, underperform in a high oil price environment.

Hormuz remains closed for indefinite period

While United States (US) President Donald Trump has announced a ceasefire extension with Iran until Washington receives a unified proposal from Tehran, the oil price remains high due to the Hormuz closure.

Iran maintains its vow that it won’t reopen the Strait of Hormuz until the US removes the blockade on Iranian sea ports, a move that was taken to freeze Iranian business activity and cripple the economy. Iranian military groups near the Hormuz continue to attack ships aiming to pass through the Hormuz.

According to a report from The Wall Street Journal (WSJ), Iranian media said the Islamic Revolutionary Guard Corps (IRGC) fired on three ships in the Strait of Hormuz and escorted two of them to Iranian waters, and is bringing those ships to Iran.

FIIs turn net sellers again after brief pause

Foreign investors continue offloading their stake from the Indian stock market after a brief pause in the April 15-17 period, when they bought shares worth Rs. 1,731.71 crore. So far this week, Foreign Institutional Investors (FIIs) have pared their stake worth Rs. 5,057.28 crore.

It seems that fears of lower India Inc. earnings projections by market experts in the wake of higher oil prices are impacting the sentiment of overseas investors towards the Indian stock market.

On the economic data front, India’s preliminary HSBC Composite Purchasing Managers’ Index (PMI) data for April has come in stronger compared to its previous readings. The Composite PMI arrives at 58.3, higher than 57.0 in March. The Manufacturing and the Services PMI expanded at a faster pace to 55.9 and 57.9, respectively.

Higher US Dollar also contributes to USD/INR's upside extension

Rising oil prices due to the Hormuz closure have improved the appeal of the US Dollar, assuming that elevating energy prices would prompt US inflation expectations, a scenario that boosts hawkish Federal Reserve (Fed) bets.

During the day, the US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, posts a fresh weekly high near 98.70.

Later in the day, investors will focus on the flash US S&P Global PMI data for April, which will be published at 13:45 GMT.

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

USD/INR trades higher at around 94.15 as of writing. The pair holds a bullish near-term bias as spot remains above the 20-day Exponential Moving Average (EMA) at 93.2609, keeping the recent rebound intact after bouncing off the low-92 area earlier in the month.

The Relative Strength Index (RSI) at 58.45 stays below overbought territory yet leans to the upside, suggesting buyers retain control but without extreme momentum.

On the downside, initial support is seen at the 20-day EMA around 93.26, where a break would signal fading bullish pressure and open the door to a deeper correction toward 93.00, followed by the March 3 high at 92.46. On the topside, the pair seems on track to revisit the all-time high above 95.00.

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