The Indian Rupee (INR) remained largely unchanged on Wednesday, with foreign demand for the US Dollar (USD) adding pressure on the local currency. Foreign banks and Indian importers, particularly local oil companies, are contributing to the uptick in USD buying. At the same time, persistent foreign outflows amid escalating global trade tensions could weigh on the INR. In 2025, foreign investors have withdrawn more than $14 billion from Indian equities.
Despite the pressure on the INR, crude oil prices are trading near a three-month low. OPEC+ has announced plans to increase oil production starting in April, which could help limit the losses of the INR, as India is the third-largest consumer of oil globally.
Investors are also awaiting India’s HSBC Composite Purchasing Managers Index (PMI) and Services PMI later in the day. On the US economic front, the ISM Services PMI will be in focus.
The INR steadied amid growing global trade uncertainties. Data revealed that the Reserve Bank of India’s (RBI) net short dollar position in forwards and futures reached a record high of $77.5 billion in January 2025. Meanwhile, US President Donald Trump’s 25% tariffs on Canadian and Mexican goods came into effect on Tuesday, alongside a 20% tariff increase on Chinese goods. US Commerce Secretary Howard Lutnick hinted that President Trump may reconsider the tariff measures within 48 hours.
New York Fed President John Williams acknowledged the easing of inflationary pressures and the strength of the US labor market but indicated that the US central bank will closely monitor the consequences of the new tariffs.
USD/INR Outlook: Bullish Momentum Holds Steady
The USD/INR pair remains bullish, as the price continues to hold above the key 100-day Exponential Moving Average (EMA). The 14-day Relative Strength Index (RSI) sits near 60, suggesting an upward bias for the currency pair.
Immediate resistance for USD/INR is at 87.53, the high of February 28, with further resistance near the all-time high around 88.00, potentially reaching 88.50. On the downside, support is seen at the 87.05-87.00 range. A drop below this level could expose further losses toward 86.48 and 86.14, marking the lows of February 21 and January 27, respectively.
Related Topics:
