April 30, 2025
New Delhi, India
USDINR
The Indian Rupee (INR) declined during Wednesday’s early European trading hours, pressured by intensifying geopolitical tensions with Pakistan. The currency weakened as security concerns mounted following warnings from Islamabad about a potential Indian military strike, adding to risk-off sentiment in the region.
On Tuesday, tourist sites across Kashmir were shut down amid unverified reports of military activity. Pakistan’s Information Minister cited “credible intelligence” suggesting that India could launch a strike within 24 to 36 hours, as reported by Al Jazeera. This followed a deadly attack on tourists in Kashmir, which has reignited regional instability. Pakistan’s defense minister also warned of an imminent incursion from India, according to Reuters.
“While sentiment is slightly positive for the rupee given the pick up in portfolio inflows, geopolitical flare-ups remain a risk for the currency,” said Dilip Parmar, forex research analyst at HDFC Securities.
Despite the pressure, some factors are offering limited support to the INR. Crude oil prices have retreated slightly, easing concerns over India’s import costs. Additionally, foreign institutional investors have turned net buyers of Indian equities over the past week, reversing the outflows seen earlier this month.
Globally, traders are turning their focus to key U.S. economic data expected later today, including the ADP private employment report, the Personal Consumption Expenditures (PCE) Price Index, and the preliminary GDP figures for Q1. Friday’s U.S. Nonfarm Payrolls report will also be closely watched for signals on the Federal Reserve’s next move.
Weaker-than-expected U.S. labor market data and a drop in consumer confidence have already raised expectations for a potential Fed rate cut. The probability of a cut rose to 56.8% as of Tuesday, after job openings fell to 7.19 million in March—the lowest since September 2024—and the Conference Board’s Consumer Confidence Index dropped to 86.0, its weakest reading since April 2020.
While domestic equity strength and lower oil prices offer some cushion, geopolitical headlines and U.S. economic signals are likely to dictate the rupee’s near-term trajectory. Traders will remain on high alert for any fresh developments from both the South Asian region and the U.S. data front.
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