- The Indian rupee gives ground in the Asian session on Tuesday.
- New foreign capital tickets and a weaker dollar support the INR; The highest prices of crude oil could limit its rise.
- Investors prepare for the FED statements and the CB consumer confidence report later on Tuesday.
The Indian rupee (INR) weakens on Tuesday after closing stronger during the ninth consecutive session in the previous session. Persistent sales of the US dollar (USD) by foreign banks and a recovery signal in foreign capital tickets provide some support to the Indian currency, helping INR to recover all its losses in 2025 so far.
However, an increase in crude oil prices could exert some sale pressure on the local currency. It is worth noting that India is the third largest oil consumer in the world and the highest prices of crude oil tend to have a negative impact on the value of the INR. The operators expect the Fed statements, together with the consumer confidence index of the Board Conference, the sales of new housing and the manufacturing index of the Richmond Fed, which will be published later on Tuesday.
Indian rupe loses ground in the face of increased prices of crude oil
- The Indian HSBC Manufacturing Manufacturing Manager Index (PMI) rose to 57.6 in March from 56.3 in February.
- The PMI of services of India was reduced to 57.7 in March compared to 59.0 previous. The compound PMI fell to 58.6 in March from 58.8 in February.
- “The manufacturing sector of India expanded at a faster rate in March … The production index rose to its highest level since July 2024,” said Pranjul Bhandari, chief economist of India in HSBC.
- Trump said Monday that he will announce tariffs on car imports in the next few days and indicated that some countries will receive exemptions from reciprocal tariffs on April 2. Trump said business partners could receive possible exemptions or reductions.
- Trump also declared that he planned to proceed with specific tariffs by sector on wood and semiconductors and repeated his threat of imposing tariffs on pharmaceutical medications “in the very close future.”
- The president of the Fed of Atlanta, Raphael Bostic, warned that economic uncertainty will continue to weigh on the decision making of the Fed while the self -domening US trade war continues to exert pressure on the economy.
- The PMI composed of the US Global S&P rose to 53.5 (preliminary) in March from 51.6 in February. Meanwhile, the manufacturing PMI fell to 49.8 in March compared to 52.7 previous, failing in the estimate of 51.9. The PMI of Services rose to 54.3 in March from 51.0 in the previous reading, above the 51.2 market consensus.
USD/INR resumes your downward road below the 100 -day Ema
Indian rupee quotes in a weaker tone in the day. The USD/INR pair resumes its downward movement, with the price crossing below the average exponential (EMA) medium key of 100 days in the daily chart. However, the 14 -day relative force index (RSI) above the 30.00 mark justifies the caution for the bearish operators, potentially indicating a temporary recovery or a greater consolidation in the short term.
The first downward objective for the USD/INR is 85.60, the minimum of January 6. Extended losses could expose 84.84, the minimum of December 19, 2024. A break of this level could see a drop at 84.22, the minimum of November 25, 2024.
On the positive side, the level of crucial resistance for the pair arises in the area of 85.95-86.00, representing the psychological level and the EMA of 100 days. The next obstacle to observe is 86.48, the minimum of February 21, en route to 87.00, the round figure.
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.
