The Indian Rupee (INR) lost ground on Tuesday, retreating after a nine-day streak of gains. Support for the rupee had come from persistent US Dollar (USD) sales by foreign banks and signs of revived foreign inflows, which helped the INR recover all its losses in 2025 so far. However, rising crude oil prices, a significant concern for India as the third-largest oil consumer globally, may put downward pressure on the currency. Crude price hikes traditionally weaken the INR due to India’s heavy dependence on oil imports.
Traders are closely monitoring the release of key US economic data, including the Federal Reserve’s remarks, the Conference Board’s Consumer Confidence Index, New Home Sales, and the Richmond Fed Manufacturing Index, which are expected later on Tuesday.
The INR’s decline comes amid higher Indian government bond yields following an increase in planned borrowing by state governments. Indian states are set to raise a record 746.55 billion rupees ($8.71 billion), more than 200 billion rupees above the originally scheduled amount. Despite concerns about oversupply, market participants are optimistic, citing strong flows from long-term investors.
India’s manufacturing sector showed stronger-than-expected growth in March, with the HSBC India Manufacturing PMI rising to 57.6 from 56.3 in February. However, the Services PMI slowed to 57.7, down from 59.0 in February, and the Composite PMI dropped to 58.6 from 58.8 in the previous month. HSBC’s Chief India Economist, Pranjul Bhandari, noted that India’s manufacturing output had reached its highest level since July 2024.
Meanwhile, global economic concerns continued to weigh on markets. Former President Donald Trump announced on Monday that the US would soon impose tariffs on automobile imports, with possible exemptions for certain countries. Additionally, he reiterated plans for tariffs on sectors like lumber, semiconductors, and pharmaceuticals, adding to uncertainties in the global trade landscape.
In the US, the S&P Global Composite PMI rose to 53.5 in March, up from 51.6 in February, while the Manufacturing PMI fell short of expectations at 49.8, down from 52.7. Conversely, the Services PMI increased to 54.3, above forecasts of 51.2.
As for the USD/INR pair, it has resumed its downward trajectory, falling below the crucial 100-day Exponential Moving Average (EMA). With the Relative Strength Index (RSI) hovering in oversold territory, bearish traders are advised to be cautious, as a short-term recovery or consolidation is possible. The first support level for the pair is 85.60, with further downside targets at 84.84 and 84.22. On the upside, resistance is seen around 85.95-86.00, with the next significant hurdle at 86.48, followed by 87.00.
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