- The Indian Rupee drops against the US Dollar as India’s WPI inflation grew moderately in July.
- US Treasury Secretary Bessent anticipates a 50-bps interest rate cut by the Fed in September.
- Investors await India-US producer inflation data for July.
The Indian Rupee (INR) falls back against the US Dollar (USD) on Thursday after a two-day recovery move. The USD/INR rises to near 87.80 as India’s Wholesale Price Index (WPI) inflation has deflated at an annual pace of 0.58% in July, faster than estimates of 0.3%, and from 0.13% in June.
Declining inflation growth at the wholesale level suggests that firms are anticipating a weak demand outlook, a scenario that would force Reserve Bank of India’s (RBI) officials to support further unwinding of monetary policy restrictiveness.
Financial market participants were already cautious about the Indian Rupee outlook ahead of the meeting between United States (US) President Donald Trump and Russian leader Vladimir Putin, which is scheduled for Friday in Alaska.
US President Trump has called Russian leader Putin to discuss ending the war in Ukraine. On Wednesday, Trump threatened “severe consequences” if Putin refused a truce in Ukraine.
The Trump-Putin meeting holds significant importance for the Indian Rupee outlook, given that the US has increased tariffs on imports from New Delhi to 50% for buying Oil from Russia. US Treasury Secretary Bessent has also threatened to increase tariffs on India further if discussions with Russia don’t go well. “We put secondary tariffs on the Indians for buying Russian oil. And I could see if things don’t go well, then sanctions or secondary tariffs could go up,” Bessent said at Bloomberg TV.
In spite of US-India trade tensions, S&P has maintained a positive outlook on India’s sovereign ratings, citing that the Indian economy is highly dependent on domestic consumption and has limited exposure to global trade. India’s long-term unsolicited sovereign credit ratings have been upgraded to “BBB” from “BBB-“.
“I don’t think the tariffs imposed on India will have an impact in terms of economic growth, largely because India is not a very trade-oriented economy. And if you look at India’s exposure to the US in terms of exports to GDP, it is just about 2 per cent,” S&P Global Ratings Director YeeFarn Phua said, NDTV reported.
Meanwhile, the continuous outflow of foreign funds from Indian equity markets is also maintaining uncertainty around the Indian Rupee’s outlook. On Wednesday, Foreign Institutional Investors (FIIs) sold Rs. 3,644.43 crores worth of shares in Indian markets. So far in August, FIIs have pared stake worth Rs. 22,264.75 crores in Indian equities, and remained buyers only on one trading day. Theoretically, currencies from economies that witness a significant outflow of foreign funds underperform their peers.
Going forward, the Indian currency is expected to remain on the sidelines as equity markets in the Asian nation will remain closed on Friday on account of Independence Day.
Indian Rupee PRICE Today
The table below shows the percentage change of Indian Rupee (INR) against listed major currencies today. Indian Rupee was the weakest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | INR | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.25% | -0.02% | -0.54% | 0.14% | 0.25% | 0.17% | 0.21% | |
| EUR | -0.25% | -0.24% | -0.79% | -0.12% | -0.01% | -0.10% | -0.05% | |
| GBP | 0.02% | 0.24% | -0.54% | 0.23% | 0.30% | 0.21% | 0.30% | |
| JPY | 0.54% | 0.79% | 0.54% | 0.70% | 0.79% | 0.70% | 0.72% | |
| CAD | -0.14% | 0.12% | -0.23% | -0.70% | 0.14% | 0.06% | 0.07% | |
| AUD | -0.25% | 0.01% | -0.30% | -0.79% | -0.14% | -0.10% | -0.12% | |
| INR | -0.17% | 0.10% | -0.21% | -0.70% | -0.06% | 0.10% | -0.02% | |
| CHF | -0.21% | 0.05% | -0.30% | -0.72% | -0.07% | 0.12% | 0.02% |
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).
Daily digest market movers: Indian Rupee declines against US Dollar, US PPI in focus
- The Indian Rupee trades lower against the US Dollar even as the latter has been battered by intensifying expectations that the Federal Reserve (Fed) will resume its monetary expansion cycle in the September policy meeting, which it paused after interest rate cuts in December 2024.
- At the time of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades cautiously near an over two-week low of around 97.60.
- According to the CME FedWatch tool, traders have almost fully priced in a 25 basis points (bps) interest rate reduction in September that will push borrowing rates lower to 4.00-4.25%. Fed dovish expectations swelled after the United States (US) Consumer Price Index (CPI) report for July showed that the headline inflation grew at a moderate pace of 0.2% on a month, as expected, softer than 0.3% in June. The CPI report diminished investors’ fears of a continuous flow of the tariff impact into prices.
- Meanwhile, market experts are mixed about the Fed reducing interest rates in September. Investment banking firm Goldman Sachs said in a research note that it expects the Fed to deliver three 25-bps interest rate cuts this year and two more in 2026. On the contrary, analysts at Commonwealth Bank of Australia said, “There will be another CPI and payrolls report ahead of the September meeting that can make or break the case for a rate cut.”
- On Wednesday, US Treasury Secretary Scott Bessent said in an interview at Bloomberg TV that the Fed could deliver a larger-than-usual reduction in interest rates by 50bps next month, citing weak payrolls data in the last three months. He further added that there is a need to bring interest rates down by 150-175 bps. “Rates are too constrictive. We should probably be 150 to 175 basis points lower,” Bessent said.
- In Thursday’s session, investors will focus on the US Producer Price Index (PPI) data for July, which will be published at 12:30 GMT. The US producer inflation is expected to have grown at a faster pace on a monthly as well as an annual basis.
Technical Analysis: USD/INR holds above 20-day EMA
USD/INR finds cushion near its weekly low of around 87.55 and rebounds to near 87.70 on Thursday. The near-term trend of the pair remains bullish as the 20-day Exponential Moving Average (EMA) slopes higher around 87.30.
The 14-day Relative Strength Index (RSI) falls to near 60.00. A fresh bullish momentum could emerge if the RSI holds above that level.
Looking down, the 20-day EMA 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
Producer Price Index (MoM)
The Producer Price Index released by the Bureau of Labor statistics, Department of Labor measures the average changes in prices in primary markets of the US by producers of commodities in all states of processing. Changes in the PPI are widely followed as an indicator of commodity inflation. Generally speaking, a high reading is seen as positive (or bullish) for the USD, whereas a low reading is seen as negative (or bearish).
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