USD/INR Gains Momentum Amid Trade Tariff Uncertainty.

Indian Rupee Weakens Amid Global Uncertainty and Persistent Outflows | USD/INR Outlook

The Indian Rupee (INR) continues to struggle against the US Dollar (USD) as global economic uncertainty and persistent capital outflows weigh on the local currency. On Monday, INR traded with a negative bias, remaining under pressure due to ongoing withdrawals from Indian equities, economic concerns, and trade tariff anxieties.

Foreign Outflows and Market Impact

Foreign investors have already pulled nearly $15 billion from Indian stocks in 2024, pushing outflows closer to the record $17 billion seen in 2022. This selloff has wiped out approximately $1.3 trillion from India’s market value, amplifying concerns over the country’s financial stability.

Factors Supporting INR Stability

Despite the bearish momentum, certain factors may help limit further INR depreciation:

• Crude Oil Price Decline: As the world’s third-largest oil consumer, India benefits from lower oil prices, easing pressure on its trade deficit.
• RBI Intervention: The Reserve Bank of India (RBI) is expected to step in to defend the Rupee. Additionally, the Indian government remains confident in the RBI’s ability to slow the currency’s decline.
• Liquidity Boost: The RBI recently announced a $21 billion Rupee liquidity infusion to support the banking system, aiming to improve lending conditions and stimulate economic growth.

US Economic Data and Federal Reserve Signals

Since there are no major economic data releases from India or the US on Monday, USD/INR price movements will largely depend on broader USD trends and market sentiment. Key US economic indicators and Federal Reserve statements include:

• US Nonfarm Payrolls (NFP): February’s NFP rose by 151K, lower than the expected 160K, signaling a potential slowdown in the labor market.
• US Unemployment Rate: Increased slightly to 4.1% in February from 4.0% in January.
• Fed’s Stance on Interest Rates: Fed Chair Jerome Powell and Fed Governor Adriana Kugler warned that policy uncertainty and fluctuating trade conditions could keep inflation elevated, impacting rate decisions.

USD/INR Technical Outlook: Key Resistance Levels to Watch

Despite near-term consolidation, the USD/INR pair maintains a bullish outlook, with prices holding above the 100-day Exponential Moving Average (EMA). The 14-day Relative Strength Index (RSI), currently near 55.0, signals sustained buying pressure.

Key resistance levels to monitor:

• 87.53 – February 28 high, acting as immediate resistance.
• 88.00 – Psychological barrier and potential breakout level.
• 88.50 – Possible long-term upside target if bullish momentum continues.

Conclusion

The Indian Rupee remains under pressure, driven by capital outflows, global uncertainty, and trade tariff concerns. However, RBI intervention and falling crude oil prices could provide temporary relief. Traders should closely monitor USD trends, US economic data, and key resistance levels for further direction in USD/INR movements.

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