The Indian Rupee (INR) remained largely flat on Friday as persistent Foreign Institutional Investor (FII) outflows continue to exert pressure on the currency. Additionally, rising expectations that the Reserve Bank of India (RBI) may further cut interest rates contribute to the INR’s downside risks.
However, a drop in crude oil prices provides some relief to the INR, as India is the world’s third-largest oil consumer. The Indian central bank’s foreign exchange interventions are expected to prevent significant depreciation of the currency.
Markets are closely watching the US February employment report, which includes the Nonfarm Payrolls (NFP), unemployment rate, and average hourly earnings. This data will likely offer insights into the economic health of the US and its future interest rate direction.
Rupee Steadies Amid Global Volatility Sparked by Trump’s Tariffs
The Reserve Bank of India (RBI) recently announced plans to infuse $21 billion in Rupee liquidity into the banking system to ease lending conditions and stimulate economic growth. Meanwhile, US President Donald Trump issued an executive order to temporarily exempt goods from Canada and Mexico, under the US-Mexico-Canada Agreement (USMCA), from the 25% tariffs imposed earlier this week.
The US Initial Jobless Claims for the week ending March 1 fell to 221K, better than market expectations of 235K, signaling strength in the labor market. Continuing jobless claims rose to 1.897 million, however, indicating some potential weaknesses.
Atlanta Fed President Raphael Bostic expressed uncertainty about the US economy’s direction, adding to market volatility. Economists forecast 160,000 new jobs in February, with the unemployment rate holding steady at 4.0%, and average hourly earnings rising by 0.3%.
USD/INR Outlook Remains Bullish Despite Near-Term Consolidation
The INR traded steady on Friday, with the USD/INR pair holding above the key 100-day Exponential Moving Average (EMA), maintaining a constructive bias. The 14-day Relative Strength Index (RSI) hovers near the 50 level, signaling the possibility of further consolidation in the short term.
The immediate upside resistance for USD/INR is at 87.53, the February 28 high. A sustained move above this level could see a rally toward an all-time high near 88.00, with further resistance at 88.50.
On the downside, support is seen at 86.48, the low from February 21, followed by 86.14, the January 27 low, and 85.60, the January 6 low.
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