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USDINR Today: Rupee Pressured by Weak Yuan and Trade Concerns

usdinr

January 28, 2025

New Delhi, India

USDINR Analysis

Current Performance:
The Indian Rupee (INR) slipped on Tuesday amid a weaker Chinese Yuan and concerns over US President Donald Trump’s trade tariffs, adding pressure on Asian currencies.

  • Key Factors Driving INR Decline:
    • Chinese Yuan Weakness: A decline in the Yuan weighed on regional peers, including the INR.
    • Equity Outflows: Foreign fund outflows and muted domestic equity trends added to the INR’s downside.
    • Strong USD Demand: Demand for the US Dollar kept the Rupee under pressure.

Market Developments:

  • RBI Intervention:
    The Reserve Bank of India (RBI) announced measures to inject liquidity, including bond purchases and dollar/rupee swaps, which aim to stabilize the currency and banking system.
  • US Trade Policies:
    Trump’s tariff threats on imports like steel, aluminum, and pharmaceuticals, along with calls for larger tariffs, heightened global trade concerns.
  • Upcoming Events:
    • Federal Reserve Meeting: While no immediate rate changes are expected, the Fed’s press conference on Wednesday may provide policy guidance.
    • India’s Federal Fiscal Deficit Report: Scheduled for Friday, this could reveal measures to boost economic growth.

Outlook for INR:
Though global trade uncertainties and weak macroeconomic conditions weigh on the INR, RBI’s intervention and liquidity measures may prevent sharp depreciation. Traders will closely watch the Fed’s stance and India’s fiscal developments for further cues.

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