USD/INR strengthens as Trump-induced tariffs storm intensifies

The Indian Rupee attracts some sellers in Monday’s early European session.
An intensifying trade war triggered by Trump’s tariff policy weighs on the INR.
Investors brace for the RBI interest rate decision on Wednesday, which is anticipated to cut rates by 25 bps.

Lallalit Srijandorn FXStreet

The Indian Rupee (INR) trades in negative territory on Monday. The local currency remains under pressure after US President Donald Trump unveiled a bigger-than-expected wall of tariffs around the world's largest economy, upending trade and supply chains. On the other hand, a fall in crude oil prices might help limit the INR’s losses. It’s worth noting that India is the world's third-largest oil consumer, and lower crude oil prices tend to have a positive impact on the Indian currency value.

Investors will monitor how trade tariffs affect foreign exchange markets. The Reserve Bank of India (RBI) will announce its policy decision on Wednesday and is widely expected to cut rates by 25 basis points (bps) amid expectations that monetary policy may turn more supportive as tariffs threaten to hurt economies globally.

Indian Rupee loses momentum as Trump tariffs shock continues

The HSBC final India Services Purchasing Managers' Index (PMI), compiled by S&P Global, improved to 58.5 in March from a preliminary estimate of 57.5. The HSBC Indian Composite PMI rose to 59.5 in March, compared to a preliminary reading of 58.6.
Trump said last week that he would impose a 26% tariff on imports from India effective from April 9, a component of his comprehensive plan to place duties on all US imports.
US Nonfarm Payrolls (NFP) rose by 228,000 in March from the revised 117,000 in February, according to the Labor Department on Friday. This figure came in stronger than the 135,000 expected.
The US Unemployment Rate ticked up to 4.2% in March versus 4.1% prior, higher than the 4.1% forecast. Average Hourly Earnings increased 0.3% MoM in March, in line with the market consensus, while the annual rate of Average Hourly Earnings rose 3.8%, the lowest level since July 2024.
Federal Reserve (Fed) Chair Jerome Powell said on Friday that inflation is likely to pick up because of Trump’s sweeping tariffs and could remain elevated.

USD/INR’s outlook remains bearish under the 100-day EMA

The Indian Rupee weakens on the day. However, in the longer term, the bearish outlook of the USD/INR pair remains in place as the price is below the key 100-day Exponential Moving Average (EMA) on the daily timeframe. The downward momentum is reinforced by the 14-day Relative Strength Index (RSI), which stands below the midline near 38.90, suggesting that the path of least resistance is to the downside.

The initial support level for USD/INR is located at 85.20, the low of April 3. Extended losses could see a drop to the 85.00 psychological level. The additional downside filter to watch is 84.84, the low of December 19.

On the upside, the 100-day EMA at 85.87 acts as an immediate resistance level for the pair. Any follow-through buying above this level could pave the way to 86.48, the low of February 21, en route to 87.00, the round mark.

Indian Rupee FAQs

What are the key factors driving the Indian Rupee?

The Indian Rupee (INR) is one of the most sensitive currencies to external factors. The price of Crude Oil (the country is highly dependent on imported Oil), the value of the US Dollar – most trade is conducted in USD – and the level of foreign investment, are all influential. Direct intervention by the Reserve Bank of India (RBI) in FX markets to keep the exchange rate stable, as well as the level of interest rates set by the RBI, are further major influencing factors on the Rupee.

How do the decisions of the Reserve Bank of India impact the Indian Rupee?

The Reserve Bank of India (RBI) actively intervenes in forex markets to maintain a stable exchange rate, to help facilitate trade. In addition, the RBI tries to maintain the inflation rate at its 4% target by adjusting interest rates. Higher interest rates usually strengthen the Rupee. This is due to the role of the ‘carry trade’ in which investors borrow in countries with lower interest rates so as to place their money in countries’ offering relatively higher interest rates and profit from the difference.

What macroeconomic factors influence the value of the Indian Rupee?

Macroeconomic factors that influence the value of the Rupee include inflation, interest rates, the economic growth rate (GDP), the balance of trade, and inflows from foreign investment. A higher growth rate can lead to more overseas investment, pushing up demand for the Rupee. A less negative balance of trade will eventually lead to a stronger Rupee. Higher interest rates, especially real rates (interest rates less inflation) are also positive for the Rupee. A risk-on environment can lead to greater inflows of Foreign Direct and Indirect Investment (FDI and FII), which also benefit the Rupee.

How does inflation impact the Indian Rupee?

Higher inflation, particularly, if it is comparatively higher than India’s peers, is generally negative for the currency as it reflects devaluation through oversupply. Inflation also increases the cost of exports, leading to more Rupees being sold to purchase foreign imports, which is Rupee-negative. At the same time, higher inflation usually leads to the Reserve Bank of India (RBI) raising interest rates and this can be positive for the Rupee, due to increased demand from international investors. The opposite effect is true of lower inflation.

BRANDED CONTENT

Choosing a broker that aligns with your trading needs can significantly impact performance. Our list of the best regulated brokers highlights the best options for seamless and cost-effective trading.

Author

Lallalit Srijandorn

FXStreet

Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.

AUD/USD eyes 0.7150 barrier nine-day EMA

AUD/USD inches higher after registering modest losses in the previous day, trading around 0.7130 during the Asian hours. The technical analysis of the daily chart indicates that the pair is moving sideways within the rectangle pattern, suggesting a consolidation as neither the bulls nor the bears have enough momentum to take control of the market.

USD/JPY trades below 160.00 intervention threshold; bullish bias intact

The USD/JPY pair attracts some sellers during the Asian session amid fears that authorities will step in again to prop up the Japanese Yen. Furthermore, the Israel-Lebanon truce prompts some profit-taking around the US Dollar and exerts downward pressure on the currency pair.

Gold puts its 200-day SMA to the test near $4,420

Gold keeps the bullish stance in place in the latter part of Thursday’s session, although a convincing break above the key $4,500 mark per troy ounce still remains elusive. The precious metal’s advance comes amid the resurgence of some selling interest around the Greenback, improving risk sentiment, and declining US Treasury yields across the board.

Bitcoin’s massive storm is back: Why the sell-off is far from over

Bitcoin price action over the last few weeks has felt less like a normal, healthy correction and more like a slow grinding crash that continues to wreak havoc on holdings and trading accounts. And everything suggests that the dramatic crash isn’t over.

Nonfarm payrolls: Testing the limits of Fed policy patience

The upcoming nonfarm payrolls report for May will provide the final update on the US labor market before Kevin Warsh attends his first policy meeting as the new Fed Chair later this month.

Recession on paper: What really moves the Canadian Loonie now?

Statistics Canada handed the headline writers a gift and the analysts a headache. Real GDP shrank 0.1% on an annualized basis in the first quarter, and with the fourth quarter of 2025 revised down to a 1.0% contraction, that is two negative quarters in a row, the textbook definition of a technical recession and Canada's first since the pandemic.