The Indian Rupee (INR) remained under pressure on Monday, continuing its downtrend as persistent outflows from Indian stocks, ongoing economic uncertainty, and trade tariff concerns weigh on the local currency. Foreign investors have pulled nearly $15 billion from Indian equities this year, putting the total outflows on track to exceed the record $17 billion set in 2022. The massive selloff has already erased $1.3 trillion from India’s market value.
While the INR faces continued headwinds, a recent decline in crude oil prices may help curb further losses, as India is the world’s third-largest oil consumer. Additionally, the Reserve Bank of India (RBI) is expected to step in to defend the currency, with the government expressing confidence that RBI interventions will slow the INR’s slide. However, in the absence of major economic data from the US and India on Monday, the USD/INR pair is likely to be influenced by fluctuations in the US Dollar.
The RBI announced last week that it would inject $21 billion in Rupee liquidity into the banking system to improve lending conditions and support economic growth. Despite this, the ongoing foreign outflows and global economic uncertainties continue to weigh on the INR.
The US Bureau of Labor Statistics (BLS) reported on Friday that February’s Nonfarm Payrolls (NFP) increased by 151,000, slightly below the anticipated 160,000. January’s NFP was revised down to 125,000, and the US unemployment rate rose to 4.1% from 4.0%. Annual wage inflation also climbed to 4.0%, up from 3.9%, showing signs of persistent inflationary pressure in the labor market.
San Francisco Federal Reserve President Mary Daly highlighted growing business uncertainty, which could dampen demand in the US economy but did not indicate the need for immediate policy changes. Fed Chair Jerome Powell also emphasized that policy uncertainty makes it difficult for the US central bank to adjust interest rates in response to current conditions. Fed Governor Adriana Kugler warned that erratic trade policies could lead to persistent inflationary pressures.
USD/INR Technical Outlook
The outlook for the USD/INR pair remains positive, as the pair continues to hold above the key 100-day Exponential Moving Average (EMA), signaling bullish momentum. The 14-day Relative Strength Index (RSI) is above 50, further indicating sustained demand for the US Dollar against the INR.
Immediate resistance for USD/INR is seen at 87.53, the high of February 28. A breakout above this level could push the pair towards an all-time high near 88.00, with the next resistance at 88.50. On the downside, support is initially at 86.48, the low from February 21. A further decline could see the pair test 86.14, the low from January 27, followed by 85.60, the low from January 6.
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