- Indian Rupee (INR) loses ground on Wednesday despite the weaker US Dollar.
- The ongoing India inflows might support the INR, while higher crude oil prices could limit its gains.
- Amid the absence of top-tier data released on Wednesday, investors await Indian and US PMI reports on Friday.
The Indian Rupee (INR) edges lower on Wednesday despite the softer Greenback. The local currency strengthened on Tuesday, supported by US Dollar (USD) sales by state-run banks and likely foreign inflows in Indian bonds and equities. Analysts expect India’s upcoming inclusion in the JPMorgan emerging market debt index could boost the Indian Rupee in the near term.
In the meantime, the weaker-than-expected US Retail Sales report spurred the likelihood that the Federal Reserve (Fed) will start to cut interest rates in a few months, which weigh on the Greenback. However, the rise of crude oil prices to two-month highs might cap the upside of the INR as India is the third largest consumer of Oil behind the US and China.
The Indian and US economic docket will be empty on Wednesday. Investors await the Indian HSBC Manufacturing and Services PMI on Friday for fresh impetus, along with the Reserve Bank of India (RBI) Meeting Minutes. On the US front, the S&P Global PMI reports will be released at the end of the week.
Daily Digest Market Movers: Indian Rupee trades softer despite the country’s positive economic outlook
- Indian Equity indices touched record highs on Tuesday, with the benchmark BSE Sensex ending at 77,301, up 308 points or 0.4%, while the Nifty50 closed at 23,558, up 92 points or 0.39%.
- The Indian Rupee may strengthen beyond 83.20 once inflows from India's inclusion in the JPMorgan emerging market debt index start later this month, said Sajal Gupta, head of forex and commodities at Nuvama Wealth Management's institutional desk.
- The US Retail Sales rose 0.1% MoM in May from a 0.2% decline in April, below the market expectation for an increase of 0.2%, the Commerce Department reported Tuesday.
- New York Fed President John Williams said on Tuesday that he expected interest rates to come down gradually as inflation eases.
- Boston Fed President Susan Collins stated that despite progress on inflation, price growth remained persistently over the Fed's 2% inflation objective, adding that it is still too early to say whether or not inflation is on course toward the target.
- Richmond Fed President Thomas Barkin said the recent data showed consumer prices did not rise at all from April to May, but the choppiness in data since last year means the policy path ahead is not clear.
Technical analysis: USD/INR remains constructive in the longer term
The Indian Rupee trades on a softer note on the day. According to the daily timeframe, the positive outlook of the USD/INR pair remains unchanged as the pair holds above the key 100-day Exponential Moving Average (EMA). However, the 14-day Relative Strength Index (RSI) returns bearish territory around 48.0, indicating that consolidation or further downside cannot be ruled out.
Extended losses below the 100-day EMA at 83.25 will see a drop to the 83.00 psychological level, followed by 82.78 (low of January 15).
On the upside, the first upside barrier for the pair is seen at 83.55 (high of June 18). Further north, the next hurdle will emerge at 83.72 (high of April 17) en route to 84.00 (round mark).
US Dollar price today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.03% | -0.01% | 0.00% | -0.10% | -0.03% | 0.11% | -0.02% | |
| EUR | -0.02% | -0.03% | -0.02% | -0.11% | -0.05% | 0.09% | -0.05% | |
| GBP | 0.02% | 0.03% | 0.02% | -0.08% | -0.02% | 0.12% | -0.01% | |
| CAD | -0.02% | 0.01% | -0.03% | -0.11% | -0.03% | 0.10% | -0.03% | |
| AUD | 0.11% | 0.11% | 0.08% | 0.11% | 0.08% | 0.20% | 0.07% | |
| JPY | 0.03% | 0.06% | 0.01% | 0.03% | -0.08% | 0.13% | 0.01% | |
| NZD | -0.13% | -0.09% | -0.12% | -0.14% | -0.24% | -0.14% | -0.13% | |
| CHF | 0.02% | 0.04% | 0.01% | 0.03% | -0.09% | -0.01% | 0.13% |
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 Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
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.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD accelerates losses to 1.0930 on stronger Dollar
The US Dollar's recovery regains extra impulse sending the US Dollar Index to fresh highs and relegating EUR/USD to navigate the area of daily troughs around 1.0930 in the latter part of Friday's session.
GBP/USD plummets to four-week lows near 1.2850
The US Dollar's rebound keep gathering steam and now sends GBP/USD to the area of multi-week lows in the 1.2850 region amid the broad-based pullback in the risk-associated universe.
Gold trades on the back foot, flirts with $3,000
Gold prices are accelerating their daily decline, steadily approaching the critical $3,000 per troy ounce mark as the Greenback's rebound gains extra momentum and US yields tighten their retracement.
Can Maker break $1,450 hurdle as whales launch buying spree?
Maker holds steadily above $1,250 support as a whale scoops $1.21 million worth of MKR. Addresses with a 100k to 1 million MKR balance now account for 24.27% of Maker’s total supply. Maker battles a bear flag pattern as bulls gather for an epic weekend move.
Strategic implications of “Liberation Day”
Liberation Day in the United States came with extremely protectionist and inward-looking tariff policy aimed at just about all U.S. trading partners. In this report, we outline some of the more strategic implications of Liberation Day and developments we will be paying close attention to going forward.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.