February 4, 2025
New Delhi, India
USDINR
- Current Performance:
The Indian Rupee (INR) weakens in Tuesday’s Asian session, pressured by a firmer US Dollar and ongoing foreign capital outflows. - Key Drivers:
- Stronger USD: Supported by robust US Manufacturing PMI data.
- Foreign Institutional Investor (FII) Outflows: Capital flight continues amid economic uncertainty.
- Weaker Indian GDP Outlook: Growth expected to slow, dampening investor sentiment.
Market Developments:
- US Trade & Tariffs:
- Trump paused 25% tariffs on Canada and Mexico for one month, but China faces a 10% levy starting Tuesday.
- Market sentiment remains cautious as traders assess global trade risks.
- US Economic & Fed Policy Outlook:
- ISM Manufacturing PMI rose to 50.9 in January, beating expectations of 49.8.
- Fed Officials’ Views:
- Boston Fed’s Collins: No urgency for rate adjustments.
- Chicago Fed’s Goolsbee: A cautious approach is needed on rate cuts.
- Rate Cut Expectations Drop: Fed rate futures now price in only a 50% chance of two cuts this year.
- Upcoming Events:
- Fed’s Bostic & Daly Speeches (Tuesday): Markets await further policy clues.
- RBI Intervention: Possible USD sales may help curb INR losses.
Outlook for INR:
While RBI intervention and Trump’s tariff pause may offer some relief, persistent USD strength and capital outflows could keep INR under pressure.
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