USD/INR consolidates at open ahead of US-Iran nuclear talks
- The Indian Rupee opens on a flat note around 91.00 against the US Dollar.
- Investors await the US-Iran nuclear talks outcome and India’s Q4 GDP data.
- The US Dollar comes under pressure after US President Trump delivered his annual SOTU address to Congress.
The Indian Rupee (INR) trades flat in the opening trade against the US Dollar (USD) on Wednesday. The USD/INR pair wobbles around 91.00 as the Indian Rupee trades with caution ahead of nuclear talks between the United States (US) and Iran on Thursday and the release of the domestic Q4 Gross Domestic Product (GDP) data on Friday.
Investors will pay close attention to the outcome of the US-Iran nuclear talks as it would have a significant impact on the oil price. Currencies from countries that rely heavily on imports of oil to fulfill their energy needs remain highly sensitive to the oil price.
The oil price is broadly firm amid tensions between the US and Iran over Tehran’s nuclear plans. Washington wants Iran to give up its intentions of building nuclear facilities, but the latter refuses to do so. US President Donald Trump has also warned of military action in Tehran if it doesn’t drop its nuclear program. Trump threatened Tehran through a post on Truth Social on Monday that it will be a very bad day for the country and its people if they don’t reach a deal.
The absence of a US-Iran deal could boost oil prices by escalating fears of disruption in the global oil supply, a scenario that will be unfavorable for the Indian Rupee.
On Friday, India’s Q4 GDP data is expected to show that the economy expanded at an annualized pace of 7.2%, slower than 8.2% growth seen in the third quarter of 2025.
Meanwhile, the US Dollar (USD) trades lower after US President Trump delivered the longest State of the Union (SOTU) speech in history. While speaking before a joint session of Congress, Trump applauded his economic achievements, called “tariffs” as a key reason behind the economic turnaround, touted large tax cuts, criticized the Supreme Court’s recent ruling against his tariff policy, and praised the Venezuela action.
As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, is down 0.13% to near 97.75.
Broadly, the US Dollar trades stably amid firm speculation that the Federal Reserve (Fed) will leave interest rates unchanged in its monetary policy meetings in March and April. The Fed is unlikely to make any monetary policy adjustment in the near term, as price pressures have remained above the central bank’s 2% target for a longer period.
Technical Analysis: USD/INR holds key 20-day EMA
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USD/INR trades flat at around 91.00 as of writing. The pair holds marginally above the 20-day Exponential Moving Average, keeping a cautious bullish bias in place while upside momentum remains contained. Price action has stabilized after the early-month surge, and the flattening of the 20-day EMA reflects a moderating trend rather than an outright reversal.
The 14-day Relative Strength Index (RSI) inside the 40.00-60.00 range, demonstrating signs of volatility contraction.
Immediate support emerges at the 20-day EMA near 90.94, with a break below exposing the recent reaction low at 90.58 and then the February 3 low at 90.15 as deeper support. On the topside, initial resistance stands at the January 22 low of 91.35, followed by the January 28 low of 91.66.
(The technical analysis of this story was written with the help of an AI tool.)
Indian Rupee FAQs
The Indian Rupee (INR) is one of the most sensitive currencies to external factors. The price of Crude Oil (the country is highly dependent on imported Oil), the value of the US Dollar – most trade is conducted in USD – and the level of foreign investment, are all influential. Direct intervention by the Reserve Bank of India (RBI) in FX markets to keep the exchange rate stable, as well as the level of interest rates set by the RBI, are further major influencing factors on the Rupee.
The Reserve Bank of India (RBI) actively intervenes in forex markets to maintain a stable exchange rate, to help facilitate trade. In addition, the RBI tries to maintain the inflation rate at its 4% target by adjusting interest rates. Higher interest rates usually strengthen the Rupee. This is due to the role of the ‘carry trade’ in which investors borrow in countries with lower interest rates so as to place their money in countries’ offering relatively higher interest rates and profit from the difference.
Macroeconomic factors that influence the value of the Rupee include inflation, interest rates, the economic growth rate (GDP), the balance of trade, and inflows from foreign investment. A higher growth rate can lead to more overseas investment, pushing up demand for the Rupee. A less negative balance of trade will eventually lead to a stronger Rupee. Higher interest rates, especially real rates (interest rates less inflation) are also positive for the Rupee. A risk-on environment can lead to greater inflows of Foreign Direct and Indirect Investment (FDI and FII), which also benefit the Rupee.
Higher inflation, particularly, if it is comparatively higher than India’s peers, is generally negative for the currency as it reflects devaluation through oversupply. Inflation also increases the cost of exports, leading to more Rupees being sold to purchase foreign imports, which is Rupee-negative. At the same time, higher inflation usually leads to the Reserve Bank of India (RBI) raising interest rates and this can be positive for the Rupee, due to increased demand from international investors. The opposite effect is true of lower inflation.
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