February 10, 2025
New Delhi, India
USDINR Today
The Indian Rupee (INR) weakened in Monday’s early European session as rising US Dollar (USD) demand, sustained foreign portfolio investor (FPI) outflows, and global economic uncertainty weighed on the currency. The Reserve Bank of India’s (RBI) intervention through USD sales by state-run banks may help limit further losses.
The INR closed at 87.4250 on Friday, marking its biggest weekly fall since December 2022. Market participants remain cautious as concerns over India’s economic slowdown and uncertainty surrounding US President Donald Trump’s tariff policies continue to put pressure on the domestic currency.
RBI Cuts Repo Rate, Signals Flexible Approach
In its latest Monetary Policy Committee (MPC) meeting, the RBI reduced the repo rate by 25 basis points (bps) to 6.25%, marking the first cut in nearly five years. RBI Governor Sanjay Malhotra stated that the central bank has adopted a neutral stance, providing more room to support economic growth while allowing the INR to adjust in line with global trends.
The RBI’s inflation forecast for FY25 stands at 4.8%, while FY26 remains unchanged at 4.2%. Meanwhile, real GDP growth projections suggest a 6.7% expansion in Q1 and Q2, 7% in Q3, and 6.5% in Q4.
Global Factors Driving INR Weakness
- US Dollar Strength: Increased demand for USD, likely linked to non-deliverable forwards market, weighed on INR.
- FPI Outflows: Continued foreign investor exits contributed to currency depreciation.
- US Tariff Uncertainty: Trump announced that new reciprocal tariffs on multiple countries will be revealed this week, impacting trade sentiment.
- US Labor Data: The Nonfarm Payrolls (NFP) report showed a 143K increase in January, missing the 170K market estimate, while the unemployment rate fell to 4%.
Market Outlook
With no major economic data releases from India or the US on Monday, the USD/INR pair is expected to be influenced by broader dollar movements. Analysts anticipate further RBI interventions to stabilize the INR, while markets closely monitor upcoming developments on US trade policy and Fed rate decisions.
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