- The Indian rupee lies upwards against the US dollar amid commercial conversations between the US and India in Washington.
- The US president Trump declared that an agreement with India will increase Washington’s access to Indian markets.
- Fed officials warned that tariff inflation has barely begun.
The Indian rupee (INR) opens upwards against the US dollar (USD) on Thursday. The USD/INR drops to about 85.95 but remains in a lateral range, while investors expect the confirmation of a commercial agreement between the United States and India. The US president Donald Trump has repeatedly reiterated that Washington is close to reaching an agreement with New Delhi, however, the lack of a confirmed announcement has kept investors out.
On Wednesday, President Trump expressed confidence in an interview broadcast by Real America’s Voice in signing an agreement with India soon, while mentioning the possibility of an agreement with the European Union (EU) as well. “We are [Washington] Very close to India, and we could possibly make an agreement with the EU, “Trump said, according to Reuters.
Trump’s comments were produced at a time when the team led by the head of the commercial negotiator of India, Rajesh Agrawal, has arrived in Washington for the next round of commercial conversations. Earlier this week, the Minister of the Union Piyush Goyal said that both nations are working to reach a “win-win” agreement, said Financial Express (Fe).
Apart from the confirmation of a commercial pact between India and the US, investors are also interested in knowing commercial terms. Market experts believe that the elimination of commercial barriers by New Delhi to make an agreement with Washington could expose Indian companies to US corporations with great capital. Such scenario would lead to intense competition for national companies that could weaken business feeling in general.
Earlier this week, President Trump also declared that a commercial pact with India will allow US access to Indian markets.
What moves the market today: Indian rupee wins against the US dollar
- The Indian rupee wins against the US dollar even when the latter lies upwards, after the comments of the Federal Reserve (Fed) officials that the impact of tariffs announced by Washington has barely begun to demonstrate.
- “It is early to evaluate the impact of tariffs on the economy, which is modest so far but will increase over time,” said Banco de la Fed in New York, John Williams In a speech at the New York Business Economy Association on Wednesday. Williams warned that tariffs should increase inflation by “a percentage point during the rest of 2025 to 2026”.
- On the current monetary policy position, Williams said it is at the right level, which will probably reduce inflation and modestly weaken the labor market.
- Separately, the president of the Fed of Atlanta, Raphael Bostic, also warned in an interview with Fox Business that general inflation “is moving away from our goal and not towards him” due to an increase in the prices of products of sectors with high import. We are seeing underlying things in the economy that suggest that inflationary pressures are increasing, and that is really a source of concern, Bostic added.
- The fears of a resumption of upward inflation pressures were caused after the US consumer price index (CPI) report showed that the prices of products imported to the US, such as home furniture, recreation and clothing, increased drastically.
- Meanwhile, President Trump continues to criticize the Fed, especially President Jerome Powell for not reducing interest rates. On Wednesday, a Bloomberg report showed that Trump will probably say goodbye to Powell soon. However, Trump denied those reports.
Technical Analysis: USD/INR Fight around the 20 -day EMA
The USD/INR falls to about 85.90 when opening on Thursday. The torque struggles to maintain the 20 -day exponential (EMA) mobile average, which quotes around 85.93, suggesting that the short -term trend is uncertain.
The 14-day relative force (RSI) index oscillates within the range of 40.00-60.00, suggesting that the asset lacks impulse in any direction.
Looking down, the minimum of May 27, 85.10 will act as a key support for the torque. On the positive side, the minimum of June 24 at 86.42 will be a critical obstacle to the pair.
Indian Rupia – Frequently Questions
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.
