- USD/INR slides about a minimum of two weeks amid the general weakness of the US dollar and the strong demand for rupees.
- The rupee is supported by FII inputs, stock market profits and crude oil prices.
- DXY remains about a minimum of three years while Trump’s criticisms to the Fed and the weak GDP of the US feed feeders of fees.
Indian rupee (INR) is further strengthened on Friday, taking advantage of a wave of US dollar weakness (USD), since the dollar slides even more in the midst of political noises and weak economic data. The new criticisms of US President Donald Trump to the president of the Federal Reserve (FED), Jerome Powell, along with the data of the Gross Domestic Product (GDP) of the first US quarter of the US weakest than expected published on Thursday, are weighing strongly on the dollar. As a result, the American dollar index (DXY) remains anchored about a minimum of three years, increasing the demand for currency of emerging markets such as rupee.
The USD/INR is under pressure, sliding around two weeks around 85.50 during European hours. However, the American dollar index (DXY) remains stable about 97.24, around the minimum of three years marked on Thursday, while operators expect the data of the Personal Consumption Expenditure Index (PCE) May, the Fed’s preferred inflation metric, which will be published at 12:30 GMT.
The direct criticism of President Trump to the president of the Fed Powell have raised new doubts about the independence of the Central Bank, which has led the operators to increase the betting bets of interest rates. There is a growing rumor that Trump could try to influence politics through a “shadow president”, an unofficial figure aimed at influencing the Fed policy direction until the mandate of Jerome Powell ends in May 2026.
The markets reacted quickly, with the operators on Thursday increasing bets on interest rate cuts. According to CME Group data, the probability of three cuts this year has increased to around 60%, compared to only two expected cuts earlier of the week.
Market movements: rupee is recovered by the weakness of the US dollar, moderate oil prices and FII inputs
- Indian rupee is registering a solid recovery after the high fire between Iran and Israel. On Friday, the rupee was seen in 23 lands at 85.49 against the US dollar, supported by strong entries of foreign institutional investors (FII) and a tone of risk in national stock markets.
- In the Variable Income Front, the Indian Variable Income Reference Indices closed upwards for the fourth consecutive session on Friday, with the NIFTY50 closing in 25,637 – his highest level since September 2024 – lined by generalized purchases, except in the sectors of IT and real estate. The Sensex won 303 points to close at 84,058.
- The lowest prices of crude oil are also helping the recovery of rupee by reducing import costs and relieving the commercial deficit, especially after the high Iran-Israel fire reduced geopolitical tensions. Both the WTI and the Brent have fallen around 12% this week, with the WTI quoting about $ 65.20 and the Brent around $ 67.05 at the time of writing.
- Commercial negotiations between India and the US have stagnated due to disagreements on import tariffs for car parts, steel and agricultural products, Indian officials said with direct knowledge. This setback darkens the hopes of reaching an agreement before the deadline of July 9 of President Trump to impose reciprocal tariffs. Although US officials have repeatedly declared that they are close to ending a commercial agreement with India, so far no official announcement has been made, keeping markets in waiting and observation mode.
- US President Donald Trump can extend the imminent limit dates to reimpose higher tariffs on imports from several countries, the White House said Thursday. Tariffs, initially scheduled to enter into force on July 8 and 9, are no longer considered fixed. The White House Secretary, Karoline Leavitt, told journalists that the dates “are not critical” and that, although an extension is possible, the final decision will be taken by the president.
- The broad budget law of President Trump is aimed at a key test in the Senate, with voting that is expected to begin as soon as Friday. The challenge arises after the Senate parliamentarian ruled that the changes proposed in Medicaid in the bill do not comply with the criteria for the accelerated budget process that Republicans are using. President Trump is pressing heavily for the approval of the Senate of his important budget package before the deadline of July 4. This deadline is not legally binding, but it is a political objective established by President Trump.
- The US dollar is still under strong pressure after Trump’s latest criticisms of the Fed, along with the growing concerns about the US commercial and fiscal perspective. The US dollar index (DXY) has fallen more than 10% so far this year and is on the way to registering its greatest fall in the first half since the beginning of the age of the floating currency in the early 1970s.
Technical Analysis: USD/INR Breaks ascending wedge, points to a deeper setback
The USD/INR torque has decisively broken below the lower limit of the ascending channel he had been respecting since the beginning of May, indicating that bassists have the advantage. The torque is currently being negotiated around 85.48, sliding below the exponential (EMA) mobile average of 21 days in 85.84 – A bearish technical signal.
The rupture below the psychological support in 86.00 has opened the door for a proof of the following horizontal support about 85.00, marked by previous consolidation levels. A strong daily closure below the current level of 85.50 could accelerate the downward impulse around 85.00 and possibly 84.50 in the next sessions.
The relative force index (RSI) has fallen to 44.88 and continues to incline down. This confirms a weakening of the bullish impulse and suggests more falls ahead unless buyers recover the area of 85.85–86.00.
India Faqs Rupia
Indian rupee (INR) is one of the most sensitive currencies to external factors. The price of crude oil (the country depends largely on imported oil), the value of the US dollar (most of the trade is carried out in US dollars) and the level of foreign investment are all influential factors. The direct intervention of the Bank of the Reserve of India (RBI) in the currency markets to keep the exchange rate stable, as well as the level of the interest rates set by the RBI, are other important factors that influence the rupee.
The Bank of the Reserve of India (RBI) actively intervenes in the currency markets to maintain a stable exchange rate and help facilitate trade. In addition, the RBI tries to maintain the inflation rate in its 4% target adjusting interest rates. Higher interest rates often strengthen rupee. This is due to the role of the “Carry Trade”, in which investors borrow in countries with lower interest rates to place their money in countries that offer relatively higher interest rates and benefit from difference.
Macroeconomic factors that influence the value of rupee include inflation, interest rates, economic growth rate (GDP), trade balance and foreign investment tickets. A higher growth rate can lead to greater investment abroad, increasing the demand for rupee. A less negative trade balance will eventually lead to a stronger rupee. The highest interest rates, especially real types (less inflation interest rates) are also positive for rupee. A risk environment can generate higher direct and indirect foreign investment entries (FI and FII), which also benefit the rupee.
Higher inflation, particularly if it is comparatively higher than other countries, is generally negative for the currency, since it reflects a devaluation through excess supply. Inflation also increases the cost of exports, which leads to more rupees to buy foreign imports, which is negative for Indian rupee. At the same time, higher inflation usually leads to the Bank of the Reserve of India (RBI) to raise interest rates and this can be positive for rupee, due to the increase in demand for international investors. The opposite effect applies to lower inflation.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
