USD/INR flat lines as investors await fresh catalysts

• The Indian Rupee steadies in Thursday’s Asian session. 
• Trump tariff threats and persistent outflows from Indian stocks weigh on the INR. 
• RBI intervention and lower crude oil prices might cap the downside for the local currency. 

The Indian Rupee (INR) is holding steady on Thursday. Concerns over the impact of trade tariffs and Foreign Portfolio Investment (FPI) outflows could exert some selling pressure on the local currency. FPIs sold more than $10 billion worth of Indian equities in the first six weeks of 2025, the largest outflow ever recorded during this time. This enormous selloff has resulted in the worst start for domestic markets in over a decade.

Nonetheless, the potential US Dollar (USD) selling intervention by the Reserve Bank of India (RBI) and a decline in crude oil prices might help limit the INR’s losses. Traders will keep an eye on the US weekly Initial Jobless Claims, the CB Leading Economic Index and the Philly Fed Manufacturing Index reports, which will be released later on Thursday. Also, the Federal Reserve’s (Fed) Austan Goolsbee, Michael Barr and Alberto Musalem are scheduled to speak on Thursday. 

Indian Rupee trades sideways amid heightened global market volatility

• The RBI’s foreign exchange reserves have declined sharply by over $75 billion since September 27, while the INR depreciated from 83.70 to 87.96 against the USD on February 10. 
• India’s Gross Domestic Product (GDP) is estimated to grow at 6.6% in the October-December quarter of 2024-25, down from 8.6% recorded in the same period of 2023-24, the Bank of Baroda showed Tuesday. 
• The minutes from the FOMC meeting released on Wednesday indicated that the Fed policymakers believe that it is well positioned to take time to assess the outlook for economic activity, the labor market and inflation. 
• Fed officials agreed that inflation must show clear signs of slowing down before any further rate reductions can be made. 
• Fed Vice Chairman Philip Jefferson said late Wednesday the US central bank has time to weigh its next interest rate decision move, citing a robust economy and still above-target inflation, per Reuters.
• Chicago Fed President Austan Goolsbee stated that inflation has fallen but is still too high, adding that once inflation falls, the interest rates can fall more.

USD/INR keeps the bullish vibe despite consolidation in the near term 

The Indian Rupee trades flat on the day. The bullish tone of the USD/INR pair remains in play as the pair holds above the key 100-day Exponential Moving Average (EMA) on the daily chart. The 14-day Relative Strength Index (RSI) stands above the midline near 55.50, supporting the buyers in the near term. 

The first upside barrier for USD/INR is located at the 87.00 psychological level. Bullish candlesticks past the mentioned level could see a rally to an all-time high near 88.00, en route to 88.50. 

In the bearish case, the initial support level to watch is 86.58, the low of February 17. The additional downside target emerges at 86.35, the low of February 12, followed by 86.14, the low of January 27.