June 4, 2025
New Delhi, India
INR Slips as Crude Oil Prices Climb; Traders Await PMI Data and RBI Policy
The Indian Rupee (INR) drifted lower in early European trade on Wednesday, pressured by an extended rally in global crude oil prices. As the world’s third-largest oil importer, India faces inflationary and trade deficits when oil prices climb, putting the local currency under stress.
However, the softening US Dollar (USD) following downbeat economic data has helped cushion the INR’s fall. A key report from the US Bureau of Labor Statistics showed job openings rose to 7.39 million in April, higher than expected but still suggesting tight labor conditions that may complicate the Federal Reserve’s rate path.
Analysts at BofA Securities noted that once global tariff-related uncertainties subside, India could emerge as one of Asia’s top three destinations for foreign inflows, further aiding INR resilience. “India has structural growth drivers that set it apart from its regional peers,” added David Hauner, head of EM fixed income strategy at BofA.
What to Watch
Market participants are focused on upcoming economic data releases:
India and US PMI reports (due Wednesday)
RBI interest rate decision (due Friday) – where a third consecutive 25 bps rate cut is expected
US May employment report – key to shaping Fed policy tone
On the macro front, the OECD projects India’s GDP to grow 6.3% in 2025–26 and 6.4% in 2026–27, reinforcing investor confidence in long-term prospects despite current volatility.
Meanwhile, Federal Reserve officials remain cautious. Lisa D. Cook flagged the Trump administration’s trade policies as a major threat to US economic stability, while Chicago Fed President Austan Goolsbee emphasized the need to assess the true impact of new tariffs before adjusting the monetary policy stance.
The USD/INR pair remains under pressure but could see direction based on services PMI data later in the day, alongside sentiment around the RBI’s monetary stance and global risk cues.
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