- The Indian rupee rises when open to about 85.85 against the US dollar due to Trump’s plan to fire Powell of the Fed.
- Powell of the Fed declared that tariff -driven inflation could be persistent.
- The monthly RBI bulletin shows that the Indian economy remained resilient in May.
The Indian rupee (INR) opens higher around 85.85 against the US dollar (USD) on Thursday. It was anticipated that the USD/INR torque would open in a weak note since the US dollar (USD) renewed its minimum of three years after the president of the United States (US), Donald Trump, attacked against the president of the Federal Reserve (Fed), Jerome Powell, for not supporting cuts in interest rates in the next policy meetings, while testifying before the Senate on the 24-25 June.
The president of the USA, Trump, called Powell of the Fed “terrible” while talking with reporters and suggested that he has three or four possible contestants for replacement. “I know that within three or four people I am going to choose from,” Trump said, Reuters reported. The agency’s report also indicated that the contestants would include the former Fed governor, Kevin Warsh, the head of the National Economic Council, Kevin Hasett, the current Governor of the Fed, Christopher Waller, and the Secretary of the Treasury, Scott Bessent.
Donald Trump’s attack on the independence of the Fed to fulfill his economic agenda has tarnished the exceptionalism of the US dollar. The US dollar index (DXY), which tracks the value of the dollar against six main currencies, falls to about 97.25.
While testified to the Senate on Wednesday, Jerome Powell declared that the Fed is being “careful by reducing interest rates” since “tariff -driven inflation could be persistent” for the economy, when asked why it has not reduced interest rates despite the fact that price pressures have decreased in recent months.
Jerome Powell also warned that premature cuts in interest rates could be harmful to the economy. “If we make a mistake, people will pay the cost for a long time,” Powell said.
What moves the market today: Indian rupee wins as the RBI bulletin shows economic resilience
- The Indian rupee wins against the US dollar on Thursday, since the Bank of the Reserve of India (RBI) has declared in its monthly newsletter of May that the Indian economy remained resilient despite the winds against the new commercial policy imposed by the US and geopolitical tensions.
- “In this state of high global uncertainty, several high frequency indicators for May 2025 point to an economic activity resilient in India in the industrial and services sectors,” said the RBI in his article ‘State of the economy,’ said Reuters.
- The Indian Central Bank has declared that current financial conditions are favorable to transmit cuts of interest rates anticipated to the economy. In the announcement of monetary policy earlier this month, the RBI unexpectedly cut the repo rate at 50 basic points (PB) to 5.5% and announced a decrease in the cash reserves of the banks to stimulate economic growth.
- This week, Indian rupee has been a clear overcoming since the price of oil collapses dramatically after the announcement of a high fire between Israel and will go on Monday. The Israel-Iran truce ruled out fears on the closure of the Ormuz Strait, a step for almost a quarter of the world oil supply.
- A lower oil price is favorable for countries such as India, which depends largely on oil imports to meet their energy needs.
- Meanwhile, the Indian stock market continues to perform strongly, driven by the feeling of risk after the Israel-Iran truce. The NIFTY50 wins more than 100 points to about 25,350 in the opening session, the highest level in the year to date. However, foreign institutional investors (FIIS) have been selling Indian actions during the last three days of negotiation. The accumulated sale by the FIIS in the period from Monday to Wednesday is 9,568.13 million rupees.
- Looking ahead, investors will focus on the data of the US Personal Consumption Expenditure Index (PCE) for May, which will be published on Friday. The inflation indicator is expected to show the FED show that inflationary pressures grew at a faster rate compared to the previous year. The impact of inflation data is expected to be contained on the US dollar and market expectations on the Fed monetary policy perspective, since investors are more concerned about high inflation expectations in the midst of uncertainty about tariff policy.
Technical Analysis: The USD/INR seems vulnerable around the 20 -day EMA
The USD/INR pair struggles to maintain the exponential (EMA) mobile average of 20 days around 85.90, which suggests that the short -term trend has become uncertain.
The 14 -day relative force index (RSI) slides vertically about 50.00 after remaining above 60.00 in the last days of negotiation, indicating a strong bearish reversion.
At the bottom, the maximum of June 12 at 85.70 will act as a key support for the torque. In the upper part, the maximum of June 24, 86.60 will be a critical obstacle to the torque.
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.
