January 21, 2025
New Delhi, India
USDINR
The Indian Rupee (INR) slid during Tuesday’s session, losing momentum after hitting a one-week high on Monday. The U.S. Dollar (USD) strengthened on renewed importer demand and a reversal of global financial flows toward the United States.
Key Drivers:
- USD Demand: Increased demand for the dollar from importers has put pressure on the INR.
- RBI Intervention: Active interventions by the Reserve Bank of India (RBI) are expected to limit sharp depreciation.
- Crude Oil Prices: Declining crude oil prices have offered some support to the INR, benefiting India, the world’s third-largest oil consumer.
Global and Domestic Cues:
- Policy Announcements: Investors await key policy updates this week, which could influence market sentiment.
- PMI Data: HSBC India’s Purchasing Managers Index (PMI) for January is due Friday, while the U.S. will release its S&P PMI flash estimates.
- Foreign Outflows: January saw foreign investors withdraw approximately $6.5 billion from Indian stocks and bonds, marking the steepest monthly outflow since October 2023.
Trump Administration’s Impact:
Donald Trump’s policy initiatives, including potential 25% tariffs on Canada and Mexico and plans to declare a national energy emergency, have added uncertainty to global markets. The USD/INR pair reflects this volatility as a new Trump 2.0 era begins.
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