Indian Rupee sees more upside on hopes of US-India trade deal

The Indian Rupee (INR) struggles to extend its Wednesday’s strong recovery move against the US Dollar (USD) on Thursday. The USD/INR pair stabilizes after attracting bids near 87.70 as investors await India’s response to United States (US) President Donald Trump’s claims signaling New Delhi will halt buying oil from Russia.

US President Trump, in a briefing at the Oval Office on Wednesday, claimed Indian Prime Minister (PM) Narendra Modi has assured him that India will halt purchasing oil from Moscow.

“So, I was not happy that India was buying oil, and he (Modi)assured me today that they will not be buying oil from Russia,” Trump said, CNBC reported.

Meanwhile, investors await a response from New Delhi about whether these claims are true. If true, what will be the impact on relations with Russia?

Trade relations between the US and India had been through a rough phase as Washington raised tariffs on imports from New Delhi to 50% for buying Russian oil, criticizing that the money is funding Moscow to continue the war in Ukraine. The scenario of India halting its oil purchase from Russia is favorable for Washington and New Delhi reaching a trade deal.

On the domestic front, the minutes of the policy meeting held earlier this month showed that Reserve Bank of India (RBI) officials see room for more interest rate cuts due to downside inflation risks. “The benign outlook for headline and core inflation as a result of the downward revision of projections opens up policy space to further support growth,” RBI Governor Sanjay Malhotra wrote, Reuters reported.

The table below shows the percentage change of Indian Rupee (INR) against listed major currencies today. Indian Rupee was the weakest against the British Pound.

USD EUR GBP JPY CAD AUD INR CHF

USD 0.00% -0.07% 0.03% -0.05% 0.03% 0.09% 0.04%

EUR -0.01% -0.07% 0.02% -0.06% -0.04% 0.11% 0.01%

GBP 0.07% 0.07% 0.18% 0.01% -0.01% 0.22% 0.11%

JPY -0.03% -0.02% -0.18% -0.06% 0.07% 0.16% 0.03%

CAD 0.05% 0.06% -0.01% 0.06% 0.09% 0.19% 0.07%

AUD -0.03% 0.04% 0.00% -0.07% -0.09% 0.18% -0.07%

INR -0.09% -0.11% -0.22% -0.16% -0.19% -0.18% -0.08%

CHF -0.04% -0.01% -0.11% -0.03% -0.07% 0.07% 0.08%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Indian Rupee from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent INR (base)/USD (quote).

	USD	EUR	GBP	JPY	CAD	AUD	INR	CHF
USD		0.00%	-0.07%	0.03%	-0.05%	0.03%	0.09%	0.04%
EUR	-0.01%		-0.07%	0.02%	-0.06%	-0.04%	0.11%	0.01%
GBP	0.07%	0.07%		0.18%	0.01%	-0.01%	0.22%	0.11%
JPY	-0.03%	-0.02%	-0.18%		-0.06%	0.07%	0.16%	0.03%
CAD	0.05%	0.06%	-0.01%	0.06%		0.09%	0.19%	0.07%
AUD	-0.03%	0.04%	0.00%	-0.07%	-0.09%		0.18%	-0.07%
INR	-0.09%	-0.11%	-0.22%	-0.16%	-0.19%	-0.18%		-0.08%
CHF	-0.04%	-0.01%	-0.11%	-0.03%	-0.07%	0.07%	0.08%

Daily digest market movers: US Dollar remains on back foot amid firm Fed dovish bets

The US Dollar has extended its corrective move amid firm Federal Reserve (Fed) dovish bets, continued US government shutdown, and escalating US-China trade tensions.
The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, extends its losing streak for the third day on Thursday and trades 0.15% lower to near 98.50 during the Asian session.
Traders remain increasingly confident that the Fed will extend its monetary easing campaign, which it started in September, due to downside labor market risks. According to the CME FedWatch tool, traders see a 94.6% that the Fed will reduce interest rates by 50 basis points (bps) to 3.50%-3.75% in the remaining year.
On Tuesday, Boston Fed President Susan Collins also supported the need for more interest rate cuts in the wake of cooling job market conditions. “It is prudent to normalize rates a bit further in 2025 as downside risks to the job market have risen, with inflation risks becoming more contained ,” Collins said.
Meanwhile, the US government has entered into its third week of shutdown as Democrats still deny support for the short-term funding bill at the US Senate. On Wednesday, US Treasury Secretary Scott Bessent stated that the federal shutdown may cost as much as $15 billion a week in lost output, Reuters reported.
On the global front, trade tensions between the US and China are likely to escalate as President Trump plans to pressure China to halt buying oil from Russia. Trump signaled on Wednesday that he will persuade Beijing to stop their Russian oil purchase, aiming to cease funding to Moscow to stop the war in Ukraine.
There have been trade frictions between the two nations for a week since Washington announced 100% additional tariffs on imports from Beijing in response to export controls on rare earths and magnets.

Technical Analysis: USD/INR sees more downside towards 87.00

The Indian Rupee attracts bids after sliding to near 87.80 against the US Dollar on Thursday. The USD/INR pair faced a sharp selling pressure on Wednesday after a breakdown of the three-week-long consolidation formed in a range between 88.75 and 89.10.

The near-term trend of the pair has become uncertain as it has dropped below the 20-day Exponential Moving Average (EMA), which is around 88.58.

The 14-day Relative Strength Index (RSI) falls below 40.00. A fresh bearish momentum if the RSI holds below that level.

Looking down, the August 21 low of 87.07 will act as key support for the pair. On the upside, the 20-day EMA will be a key barrier.

Economic Indicator

RBI Interest Rate Decision (Repo Rate)

The RBI Interest Rate Decision is announced by the Reserve Bank of India. If the bank is hawkish about the inflationary outlook of the economy and rises the interest rates, it is seen as positive, or bullish, for the INR, while a dovish outlook for the economy (or a rate cut) is seen as negative, or bearish, for the currency.