- Indian rupee weakens in Monday’s Asian session.
- The highest prices of oil and RBI fees cuts weigh on the INR, but the strongest GDP data in India could limit its fall.
- The operators expect the data of the USM manufacturing PMI of the USA of May later on Monday, before the RBI rates decision.
Indian rupee (INR) extends the fall on Monday. An increase in crude oil prices drags the Indian currency down. 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. In addition, the growing expectation that the Indian Reserve Bank (RBI) will deliver a third rate of 25 basic points (PB) to boost growth could limit the horny potential of the INR in the short term.
However, the optimistic Gross Domestic Product (GDP) report of the first quarter of India could boost the shares and raise the local currency both through portfolio flows and feeling. Looking forward, the operators will keep an eye on the report of the purchasing managers index (PMI) of manufacturing of the US ISM of May, which will be published later on Monday. On Friday, the RBI RAVES decision and the US non -agricultural payroll data (NFP) will be at the center of attention.
The operators will also closely monitor a commercial negotiation between the United States (USA) and India, which is expected to officially conclude for autumn. The president of the USA, Donald Trump, imposed tariffs of up to 27% to Indian products on April 2 and a 90 -day tariff break in these ends on July 9.
Indian rupee weakens despite the optimistic report of India’s GDP
- The economy of India grew by 7.4% year -on -year in the first quarter of 2025, compared to 6.2% of the previous quarter and significantly exceeding the expectations of analysts of 6.7%.
- India remains the fastest growing economy in the world, although growth has decreased dramatically from 9.2% registered in fiscal year 2023-24.
- Net foreign foreign investment (FDI) in India fell to 0.35 billion dollars in 2024-25, the lowest level in two decades, since the increase in outgoing foreign investment and repatriation by Indian companies compensated for incoming investment.
- Indian rupee is becoming the worst performance of Asia this quarter and could continue behind its peers, since the RBI seeks to avoid exhaustion of its foreign exchange reserves, according to analysts.
- India’s foreign exchange reserves were approximately 693 billion dollars as of May 23, below the historical maximum of 705,000 million dollars reached in September last year.
- The US Personal Consumption Expenditure Index (PCE) increased by 2.1% year -on -year in April, compared to 2.3% in March, according to the US economic analysis bureau on Friday. This figure was below the market consensus of 2.2%.
USD/INR maintains the long -term bearish trend
Indian rupee operates in negative terrain for the fifth consecutive day. However, the USD/INR pair remains limited below the 100 -day exponential mobile average (EMA) in the daily frame, indicating that the lower resistance path is down. In the short term, greater consolidation cannot be ruled out, with the 14 -day relative force (RSI) index around the midline.
The USD/INR seems to be finding initial support at 84.78, the minimum of May 26. A rupture below the mentioned level could trigger a fall around 84.61, the minimum of May 12. The following bearish objective to be observed is 84.00, the psychological level and the lower limit of the trend channel.
On the other hand, the key resistance level for the PAR arises in the area of 85.55-85.65, which represents the 100-day Ema and the upper limit of the trend channel. Any monitoring purchase could see a rebound around 86.10, the maximum of May 22.
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.
