• Indian Rupee remains relatively quiet ahead of the FOMC meeting.
  • A pullback in US Treasury bond yields and lower oil prices lift the Indian Rupee on Tuesday.
  • Federal Open Market Committee's (FOMC) interest rate decision will be closely watched by traders.

Indian Rupee (INR) trades flat on Tuesday amid multiple challenges. A pullback in US Treasury bond yields and lower oil prices lift the INR on the day. Nonetheless, the equity outflows might exert pressure on the INR as overseas investors sold $1.67B in Indian equities in October. Additionally, the challenges from the Middle East geopolitical tension might boost safe-haven assets like the Greenback and act as a tailwind for the USD/INR pair.

Investors will monitor India’s Fiscal Deficit and Infrastructure Output data for September on Tuesday. The spotlight this week will be the highly-anticipated Federal Open Market Committee's (FOMC) interest rate decision on Wednesday. The markets anticipate the central bank to leave the interest rate unchanged at its November meeting.

Daily Digest Market Movers: Indian Rupee remains sensitive to the geopolitical factors and risk sentiment

  • Market players will monitor whether the RBI starts selling bonds via open market operations (OMO) this week as liquidity improves.
  • India's foreign exchange reserves declined by $2.36B to $583.53B for the week ending October 20, according to the RBI.
  • The US Dallas Fed Manufacturing Index fell to -19.2 in October from -18.1 drop in September.
  • The US Core Personal Consumption Expenditure Index (PCE) arrived at 3.7% YoY in September from 3.8% in the previous reading, matching the market expectation, the headline PCE came in at 3.4% YoY vs the estimation of 3.4%.
  • The Michigan Consumer Confidence Index improved to 63.8, better than expected.
  • UoM inflation expectations for a one-year period are expected to grow by 4.2%, while for a five-year period are expected to remain steady at 3.0%.
  • Foreign investors sold $1.67B in Indian equities in October, which might weigh on the Indian Rupee.
  • RBI will continue to keep an eye on maintaining inflation at the 4% target.
  • RBI forecasted that India's GDP would grow at a 6.5% annual rate in the current fiscal year.
  • The International Monetary Fund (IMF) revised up its forecast growth rate for India to 6.3% in October.
  • India’s Wholesale Price Index (WPI) for September, a gauge of inflation, dropped -0.26% YoY versus 0.52% prior, below the market consensus of 0.50%.

Technical Analysis: The Indian Rupee trades flat with a slight negative bias

The Indian Rupee trades around a flatline on the day. The USD/INR pair remains confined within a range of 83.00–83.35. The upward outlook of USD/INR remains intact as the pair holds above the 100- and 200-day Exponential Moving Averages (EMA) on the daily chart.

Any decisive follow-through buying above the upper boundary of the trading range of 83.35 will see a rally to year-to-date (YTD) highs of 83.45. Further north, the next upside barrier at a psychological round mark at 84.00. On the flip side, the key support level is seen at 83.00, representing the confluence of a low of October 20 and a round mark. A breach below the 83.00 mark could see a drop to 82.82 (low of September 12), en route to 82.65 (low of August 4). 

US Dollar price in the last 7 days

The table below shows the percentage change of US Dollar (USD) against listed major currencies in the last 7 days. US Dollar was the strongest against the Swiss Franc.

  USD EUR GBP CAD AUD JPY NZD CHF
USD   0.69% 0.85% 1.12% -0.16% 0.32% 0.40% 1.26%
EUR -0.69%   0.16% 0.43% -0.86% -0.38% -0.30% 0.56%
GBP -0.85% -0.17%   0.27% -1.03% -0.54% -0.47% 0.40%
CAD -1.13% -0.44% -0.27%   -1.30% -0.82% -0.73% 0.12%
AUD 0.18% 0.87% 1.03% 1.29%   0.49% 0.57% 1.43%
JPY -0.32% 0.38% 0.54% 0.80% -0.50%   0.07% 0.93%
NZD -0.39% 0.31% 0.46% 0.73% -0.56% -0.09%   0.85%
CHF -1.25% -0.55% -0.39% -0.11% -1.42% -0.93% -0.85%  

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 Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).

Indian Rupee FAQs

What are the key factors driving the Indian Rupee?

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.

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

EUR/USD stays deep in the red near 1.0450 amid notable US Dollar demand

EUR/USD stays deep in the red near 1.0450 amid notable US Dollar demand

EUR/USD holds sizable losses near 1.0450 in Tuesday's European trading amid notable US Dollar demand. Trump’s tariff threats and rebounding US bond yields provide a goodish lift to the Greenback. Bets for a move aggressive policy easing by the ECB contribute to the pair's decline. 

EUR/USD News
GBP/USD holds losses near 1.2450 on stronger US Dollar

GBP/USD holds losses near 1.2450 on stronger US Dollar

GBP/USD is off the lows but remains under decent selling pressure near 1.2450 in the European session. The pair is undermined by US President Trump's tariff threats-led risk aversion and unabated US Dollar buying. The focus shifts to the mid-tier US economic data. 

GBP/USD News
Gold flat after Nvidia rout spilled over on Monday

Gold flat after Nvidia rout spilled over on Monday

Gold’s price (XAU/USD) faces pressure for the second day in a row, trading at around $2,735 at the time of writing on Tuesday, following an over 1% dive the previous day after the Chinese AI startup DeepSeek shook up markets.

Gold News
Sui and Ondo Price Forecast: SUI and ONDO bears eye for double-digit crash

Sui and Ondo Price Forecast: SUI and ONDO bears eye for double-digit crash

Sui and Ondo prices hover around $3.90 and $1.33 on Tuesday after declining recently. Both altcoins could be poised for a double-digit crash ahead as Sui technical indicators show bearish momentum, while ONDO funding rates are negative.

Read more
What is DeepSeek, and why is it important?

What is DeepSeek, and why is it important?

Several Chinese companies pivoted into making their various AI model offerings open source last week, sending shockwaves through the tech sector. Chinese tech startups look set to disrupt the AI space, which has, until recently, been almost singularly dominated by high-priced US tech giants and soaring valuations.

Read more
Trusted Broker Reviews for Smarter Trading

Trusted Broker Reviews for Smarter Trading

VERIFIED Discover in-depth reviews of reliable brokers. Compare features like spreads, leverage, and platforms. Find the perfect fit for your trading style, from CFDs to Forex pairs like EUR/USD and Gold.

Read More

Forex MAJORS

Cryptocurrencies

Signatures