USD/INR steadies as Indian Rupee gains on equity inflows, US Dollar weakness
- USD/INR stays calm as equity inflows and broad US Dollar weakness support the Indian Rupee.
- Foreign investors bought ₹694.5 million ($7.67 million) in Indian equities on Tuesday, extending inflows to a third straight session.
- Markets expect Nonfarm Payrolls to show 70,000 jobs added, with Unemployment Rate steady at 4.4% in January.
USD/INR moves little on Wednesday after registering modest losses in the previous session. The Indian Rupee (INR) is supported by equity inflows and broad-based US Dollar (USD) weakness. However, INR gains may be limited as persistent Greenback demand from local corporates caps the upside.
Reuters cited provisional data suggesting foreign investors purchased Indian equities worth 694.5 million rupees ($7.67 million) on Tuesday, marking a third straight session of inflows. Market participants are also monitoring corporate earnings, with the December-quarter reporting season drawing to a close.
The INR found support around the 90.70–90.80 zone on Tuesday, a key level seen as critical to sustaining momentum following the US–India trade deal. Meanwhile, traders highlighted continued dollar demand from importers hedging liabilities, with buying interest increasing whenever the Rupee strengthens.
US Dollar extends losses ahead of Nonfarm Payrolls
- The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, extends its losses for the fourth successive session and is trading near 96.70 at the time of writing.
- Traders await the delayed US employment report scheduled to be released on Wednesday for more hints about the US interest rate outlook. Markets expect the Nonfarm Payrolls (NFP) to show 70,000 jobs added in the US economy in January, while the Unemployment Rate is projected to remain steady at 4.4% during the same period.
- The US Census Bureau reported Tuesday that US Retail Sales were flat at $735 billion in December, following a 0.6% rise in November and missing expectations for a 0.4% increase. On a YoY basis, Retail Sales rose 2.4%, while total sales for October–December 2025 increased 3.0% (±0.4%) compared with the same period a year earlier.
- Markets anticipate the Fed will hold rates in March, with a first cut likely in June and a possible follow-up in September.
- US inflation expectations eased, with median one-year-ahead inflation expectations falling to 3.1% in January, the lowest in six months, from 3.4% in December. Food price expectations were unchanged at 5.7%, while three- and five-year expectations remained steady at 3%.
- Markets currently expect the Fed to keep interest rates unchanged in March, with potential rate cuts anticipated in June and possibly September. San Francisco Fed President Mary Daly said in a LinkedIn post on Friday that the economy may remain in a low-hiring, low-firing environment, though it could also shift toward a no-hiring, higher-firing phase.
- Fed Governor Phillip Jefferson said future policy decisions will be guided by incoming data and assessments of the economic outlook, adding on Friday that the labor market is gradually stabilizing. Meanwhile, Atlanta Fed President Raphael Bostic noted that inflation has remained elevated for too long, stressing in a Bloomberg interview on Friday that the Fed cannot lose sight of inflationary risks.
- The United States (US)–India interim trade framework. New Delhi and Washington on Friday unveiled an interim framework aimed at lowering tariffs, reshaping energy ties, and deepening economic cooperation. The announcement follows a breakthrough in prolonged negotiations earlier last week and helped lift the Rupee to its strongest weekly gain in more than three years.
- The US and India reached a wide-ranging trade agreement involving India buying more than $500 billion in purchases, tariff reductions, and provisions on digital trade, significantly reshaping bilateral commercial relations. India will also eliminate or lower tariffs on US industrial products and a broad spectrum of agricultural goods, with reductions covering food items such as grains, edible oils, fruit, wine, and spirits.
USD/INR falls to near 90.50 after pulling back from nine-day EMA
USD/INR is trading around 90.70 at the time of writing. Daily chart analysis suggests a prevailing bearish bias, with the pair moving within a descending channel. The 14-day Relative Strength Index (RSI) at 47 indicates neutral-to-bearish momentum, easing after recent overbought conditions.
Initial support is located at the 50-day Exponential Moving Average (EMA) near 90.50. A decisive break below this level could weaken medium-term momentum and open the door toward the channel’s lower boundary around 89.30. On the upside, immediate resistance stands at the nine-day EMA near 90.83. A sustained move higher may target the upper boundary of the channel around 91.60, followed by the record high of 92.51 reached on January 28.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Indian Rupee.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | INR | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.11% | -0.13% | -0.43% | -0.25% | -0.68% | -0.31% | 0.00% | |
| EUR | 0.11% | -0.02% | -0.33% | -0.15% | -0.56% | -0.18% | 0.12% | |
| GBP | 0.13% | 0.02% | -0.34% | -0.11% | -0.57% | -0.19% | 0.15% | |
| JPY | 0.43% | 0.33% | 0.34% | 0.19% | -0.24% | 0.15% | 0.45% | |
| CAD | 0.25% | 0.15% | 0.11% | -0.19% | -0.42% | -0.03% | 0.27% | |
| AUD | 0.68% | 0.56% | 0.57% | 0.24% | 0.42% | 0.39% | 0.68% | |
| NZD | 0.31% | 0.18% | 0.19% | -0.15% | 0.03% | -0.39% | 0.30% | |
| INR | -0.01% | -0.12% | -0.15% | -0.45% | -0.27% | -0.68% | -0.30% |
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 US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
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.
Recommended Articles
