USD/INR Slows Down Amid Mixed Indian PMI Data.

Indian Rupee Strengthens Amid Positive Equities and Fresh Foreign Inflows

The Indian Rupee (INR) started the week on a strong note, trading at its highest levels in over two months. Supported by robust domestic equities and renewed foreign fund inflows, the INR continues to gain traction despite mixed economic data and global uncertainties.

Mixed Indian PMI Data Supports INR Amid USD Inflows

Fresh economic data released on Monday revealed that the HSBC India Manufacturing Purchasing Managers’ Index (PMI) rose to 57.6 in March, up from 56.3 in February, signaling expansion in the sector. However, the Indian Services PMI dropped to 57.7 from 59.0, while the Composite PMI slightly declined to 58.6 from 58.8.

Despite the mixed results, the Indian Rupee remained resilient, benefiting from continued US Dollar (USD) inflows that offset declines seen in other Asian currencies.

Crude Oil Prices and Geopolitical Risks Pose Challenges

While the INR remains firm, a rebound in crude oil prices—driven by geopolitical tensions in the Middle East—could weigh on the currency. As India is the world’s third-largest oil importer, rising crude prices may exert downward pressure on the Rupee.

USD/INR Outlook: Expected Trading Range and Market Forecasts

Forex analysts predict that the USD/INR pair will fluctuate between 86.00 and 86.80 in the near term. Amit Pabari, MD of CR Forex Advisors, suggests that a slight rebound towards the 86.50-86.60 range is likely, given ongoing global market trends.

Key Global Developments to Watch

Several international factors may influence the INR’s trajectory:

• Trump Declares April 2 as “Liberation Day”
  The former US president announced plans to introduce reciprocal tariffs on various sectors, including automobiles, pharmaceuticals, and semiconductors, which could impact global trade dynamics.

• US Migrant Policy Shift
  The US administration is set to revoke temporary legal status for over 500,000 migrants from Cuba, Haiti, Nicaragua, and Venezuela by April 24, potentially triggering broader economic consequences.

• US Federal Reserve Rate Cut Projections
  The Federal Reserve reaffirmed its forecast of two quarter-point rate cuts later this year, maintaining its stance from December. This could influence global currency markets, including the INR.

Final Thoughts

With strong domestic fundamentals and renewed foreign inflows, the Indian Rupee remains in a favorable position despite global economic uncertainties. However, traders should keep a close watch on crude oil prices, US economic policies, and Federal Reserve decisions, which could impact the USD/INR movement in the coming weeks.