USD/INR slides further as USD Index refreshes three-year low
- The Indian Rupee jumps higher against the US Dollar as Trump attacks Fed's independence.
- Fed’s Powell stated that tariffs-driven inflation could be persistent.
- The RBI monthly bulletin shows that the Indian economy remained resilient in May.
The Indian Rupee (INR) gains sharply against the US Dollar (USD) on Thursday. The USD/INR pair slides to near 85.65 during European trading hours, the lowest level seen in 10 days. The pair weakens as the US Dollar (USD) renewed its three-year low after United States (US) President Donald Trump lashed out on Federal Reserve (Fed) Chair Jerome Powell for not supporting interest rate cuts in the upcoming policy meetings, while testifying before the Senate on June 24-25.
US President Trump called Fed’s Powell “terrible” while speaking with reporters and floated the idea that he has three or four potential contenders for his replacement. "I know within three or four people who I’m going to pick, Trump said, Reuters reported. The report from the agency also stated that contenders would include its former Fed Governor Kevin Warsh, National Economic Council head Kevin Hassett, current Fed Governor Christopher Waller, and Treasury Secretary Scott Bessent.
Donald Trump’s attack on the Fed’s independence to fulfill his economic agenda has dampened the US Dollar’s exceptionalism. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, slumps to near 97.00.
While testifying before the Senate on Wednesday, Jerome Powell stated that the Fed is being “careful about reducing interest rates” as “tariffs-driven inflation could prove to be persistent” for the economy, when asked why he has not brought borrowing rates down despite price pressures easing in the last few months.
Jerome Powell also warned that premature interest rate cuts could be harmful for the economy. “If we make a mistake, people will pay the cost for a long time," Powell said.
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 | -0.64% | -0.72% | -0.86% | -0.30% | -0.61% | -0.32% | -0.68% | |
| EUR | 0.64% | -0.02% | -0.29% | 0.36% | 0.07% | 0.28% | -0.02% | |
| GBP | 0.72% | 0.02% | -0.26% | 0.38% | 0.09% | 0.35% | -0.00% | |
| JPY | 0.86% | 0.29% | 0.26% | 0.61% | 0.31% | 0.57% | 0.22% | |
| CAD | 0.30% | -0.36% | -0.38% | -0.61% | -0.29% | -0.05% | -0.39% | |
| AUD | 0.61% | -0.07% | -0.09% | -0.31% | 0.29% | 0.25% | -0.10% | |
| INR | 0.32% | -0.28% | -0.35% | -0.57% | 0.05% | -0.25% | -0.28% | |
| CHF | 0.68% | 0.02% | 0.00% | -0.22% | 0.39% | 0.10% | 0.28% |
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).
Daily digest market movers: Indian Rupee moves higher on risk-on mood, domestic economic resilience
- The Indian Rupee gains against the US Dollar on Thursday as the Reserve Bank of India (RBI) has stated in its monthly bulletin of May that the Indian economy remained resilient despite the headwinds of the new trade policy imposed by the US and geopolitical tensions.
- "In this state of elevated global uncertainty, various high-frequency indicators for May 2025 point towards resilient economic activity in India across the industrial and services sectors," the RBI said in its ’State of the Economy’ article, Reuters reported.
- The Indian central bank has stated that current financial conditions are favorable to transmit front-loaded interest rate cuts into the economy. In the monetary policy announcement earlier this month, the RBI unexpectedly slashed the Repo Rate by 50 basis points (bps) to 5.5% and announced a decline in the cash reserves by banks to stimulate economic growth.
- This week, the Indian Rupee has remained a clear outperformer as the Oil price tumbles sharply after the announcement of a ceasefire between Israel and Iran on Monday. The Israel-Iran truce ruled out fears of the closure of the Strait of Hormuz, a passage for almost a quarter of the global Oil supply.
- Lower Oil price bodes well for the currencies of countries like India, which relies heavily on oil imports to fulfill its energy needs.
- Meanwhile, the Indian equity market continues to perform strongly, buoyed by risk-on sentiment after the Israel-Iran truce. Nifty50 surges almost 250 points to near 25,500, the highest level in the year to date. However, Foreign Institutional Investors (FIIs) have been selling Indian equities over the last three trading days. The cumulative sell-off by FIIs in the Monday-Wednesday period is Rs. 9,568.13 crores.
- Going forward, investors will focus on the US Personal Consumption Expenditure Price Index (PCE) data for May, which will be published on Friday. The Fed’s preferred inflation gauge is expected to show that inflationary pressures grew at a faster pace on year. The impact of the inflation data is expected to be contained on the US Dollar and market expectations for the Fed’s monetary policy outlook, as investors are more concerned about elevated inflation expectations amid uncertainty over the tariff policy.
Technical Analysis: USD/INR sees more downside towards 86.60
The USD/INR pair struggles to hold the 20-day Exponential Moving Average (EMA) around 85.90, suggesting that the near-term trend has become uncertain.
The 14-day Relative Strength Index (RSI) slides vertically to near 50.00 after remaining above 60.00 in the past few trading days, indicating a strong bearish reversal.
On the downside, the June 12 high at 85.70 will act as key support for the major. On the upside, the June 24 high of 86.60 will be a critical hurdle for the pair.
Indian economy FAQs
The Indian economy has averaged a growth rate of 6.13% between 2006 and 2023, which makes it one of the fastest growing in the world. India’s high growth has attracted a lot of foreign investment. This includes Foreign Direct Investment (FDI) into physical projects and Foreign Indirect Investment (FII) by foreign funds into Indian financial markets. The greater the level of investment, the higher the demand for the Rupee (INR). Fluctuations in Dollar-demand from Indian importers also impact INR.
India has to import a great deal of its Oil and gasoline so the price of Oil can have a direct impact on the Rupee. Oil is mostly traded in US Dollars (USD) on international markets so if the price of Oil rises, aggregate demand for USD increases and Indian importers have to sell more Rupees to meet that demand, which is depreciative for the Rupee.
Inflation has a complex effect on the Rupee. Ultimately it indicates an increase in money supply which reduces the Rupee’s overall value. Yet if it rises above the Reserve Bank of India’s (RBI) 4% target, the RBI will raise interest rates to bring it down by reducing credit. Higher interest rates, especially real rates (the difference between interest rates and inflation) strengthen the Rupee. They make India a more profitable place for international investors to park their money. A fall in inflation can be supportive of the Rupee. At the same time lower interest rates can have a depreciatory effect on the Rupee.
India has run a trade deficit for most of its recent history, indicating its imports outweigh its exports. Since the majority of international trade takes place in US Dollars, there are times – due to seasonal demand or order glut – where the high volume of imports leads to significant US Dollar- demand. During these periods the Rupee can weaken as it is heavily sold to meet the demand for Dollars. When markets experience increased volatility, the demand for US Dollars can also shoot up with a similarly negative effect on the Rupee.
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.
