USD/INR trades calmly, US tariffs and FIIs outflows keep Indian Rupee on toes
- The Indian Rupee flattens around 87.80 as the marginally lower US Dollar offsets the impact of US tariffs on India.
- FIIs have sold Indian equities worth Rs. 34,733.75 crores so far in August.
- Fed’s Williams opens the door for interest rate cuts.
The Indian Rupee (INR) trades almost flat at around 87.80 against the US Dollar (USD) in opening trading hours on Thursday after a holiday on Wednesday on account of Ganesh Chaturthi. The USD/INR pair is supported by a sluggish performance from the US Dollar.
However, the outlook of the Indian Rupee is under stress as Russia-linked tariffs announced by United States (US) President Donald Trump on imports from India earlier this month have become effective from Wednesday.
From now onwards, goods entering the US for consumption or withdrawn from warehouses for consumption from India will be charged 50% additional duty, a move that will diminish the competitiveness of Indian products in the global market and force exporters to offer their goods at lower prices.
Additionally, foreign investors have been consistently paring stakes from Indian stock markets amid trade tensions. On Tuesday, Foreign Institutional Investors (FIIs) sold equity shares worth Rs. 6,516.49 crores in equity markets. So far in August, FIIs have sold equity worth Rs. 34,733.75 crores. Consistent outflow of overseas funds from Indian markets has weighed heavily on benchmark indices. Nifty50 is down over 4% from its recent highs of 25,670 posted on June 30.
Meanwhile, the Industrial Output for July has come in stronger-than-expected at 3.5%, higher than estimates of 2.1% and the prior reading of 1.5%. The Manufacturing Output grew strongly by 5.4% vs. the former release of 3.9%.
Daily digest market movers: Investors await key US PCE Inflation data
- The US Dollar faces a slight selling pressure on Thursday, following dovish remarks on interest rates from New York Federal Reserve (Fed) Bank President John Williams in an interview with CNBC on Wednesday.
- At the time of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades lower to near 97.90.
- On Wednesday, Fed’s Williams stated the need to push interest rates close to “neutral” at some time as the "economy is going through an adjustment process." However, he didn’t endorse an interest rate cut in the September policy meeting, but kept the door open, stating that officials want to see the upcoming data before reaching a conclusion. "Risks are more in balance. We are going to just have to see how the data plays out," Williams said.
- Meanwhile, traders see an 87% chance that the Fed will cut interest rates in September, according to the CME FedWatch tool.
- For fresh cues on the interest rate outlook, investors await the US Personal Consumption Expenditure Price Index (PCE) data for July, which is scheduled for Friday. Economists expect the US core PCE inflation, which is the Fed’s preferred inflation gauge, to have risen at a faster pace of 2.9% on year against 2.8% in June, with monthly figures rising steadily by 0.3%.
- On the broader front, the outlook for the US Dollar is uncertain amid the ongoing tussle between US President Trump’s economic agenda and the Fed’s independence. Earlier this week, Trump released a letter stating Fed Governor Lisa Cook’s termination over mortgage allegations. In response, Fed’s Cook has announced that she will file a lawsuit to keep her job.
- Market experts have seen the event as an attack on the Fed’s independence, which would raise doubts over the safe-haven appeal of the US Dollar. Investors will naturally start to increasingly question the independence of the Fed, which would result in a steeper yield curve and a weaker dollar,” analysts at ING said, Reuters reported.
The table below shows the percentage change of Indian Rupee (INR) against listed major currencies today. Indian Rupee was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | INR | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.12% | -0.10% | -0.24% | -0.14% | -0.29% | -0.04% | -0.30% | |
| EUR | 0.12% | 0.06% | -0.10% | 0.00% | -0.15% | 0.14% | -0.16% | |
| GBP | 0.10% | -0.06% | -0.18% | -0.06% | -0.21% | 0.06% | -0.20% | |
| JPY | 0.24% | 0.10% | 0.18% | 0.13% | -0.10% | 0.16% | -0.04% | |
| CAD | 0.14% | -0.00% | 0.06% | -0.13% | -0.15% | 0.13% | -0.06% | |
| AUD | 0.29% | 0.15% | 0.21% | 0.10% | 0.15% | 0.23% | -0.00% | |
| INR | 0.04% | -0.14% | -0.06% | -0.16% | -0.13% | -0.23% | -0.20% | |
| CHF | 0.30% | 0.16% | 0.20% | 0.04% | 0.06% | 0.00% | 0.20% |
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).
Technical Analysis: USD/INR consolidates around 87.80
The USD/INR pair flattens around 87.80 on Thursday. The near-term trend of the pair remains bullish as it holds above the 20-day Exponential Moving Average (EMA), which trades near 87.44.
The 14-day Relative Strength Index (RSI) rises above 60.00. A fresh bullish momentum would emerge if the RSI holds above that level.
Looking down, the July 28 low around 86.55 will act as key support for the major. On the upside, the August 5 high around 88.25 will be a critical hurdle for the pair.
Economic Indicator
Core Personal Consumption Expenditures - Price Index (YoY)
The Core Personal Consumption Expenditures (PCE), released by the US Bureau of Economic Analysis on a monthly basis, measures the changes in the prices of goods and services purchased by consumers in the United States (US). The PCE Price Index is also the Federal Reserve’s (Fed) preferred gauge of inflation. The YoY reading compares the prices of goods in the reference month to the same month a year earlier. The core reading excludes the so-called more volatile food and energy components to give a more accurate measurement of price pressures." Generally, a high reading is bullish for the US Dollar (USD), while a low reading is bearish.
Read more.Next release: Fri Aug 29, 2025 12:30
Frequency: Monthly
Consensus: 2.9%
Previous: 2.8%
Source: US Bureau of Economic Analysis
After publishing the GDP report, the US Bureau of Economic Analysis releases the Personal Consumption Expenditures (PCE) Price Index data alongside the monthly changes in Personal Spending and Personal Income. FOMC policymakers use the annual Core PCE Price Index, which excludes volatile food and energy prices, as their primary gauge of inflation. A stronger-than-expected reading could help the USD outperform its rivals as it would hint at a possible hawkish shift in the Fed’s forward guidance and vice versa.