May 14, 2025
New Delhi, India
USDINR
The Indian Rupee advanced modestly on Thursday, buoyed by de-escalating US-China trade tensions, easing global crude oil prices, and a weakening US Dollar. The currency’s gains come as traders react to improving global risk sentiment and await critical US economic data releases later in the day.
The truce between Washington and Beijing has uplifted investor confidence across global markets, benefiting emerging market currencies like the INR. A drop in oil prices further supported the Indian currency, given India’s status as one of the world’s largest oil importers.
Adding to the mix, India’s retail inflation cooled to its lowest point since July 2019, prompting fresh speculation about the Reserve Bank of India’s (RBI) next move. Softer inflation could give the central bank additional room to slash interest rates in its upcoming policy meeting, which may limit upside potential for the Rupee.
Wholesale inflation also decelerated sharply. The Ministry of Commerce and Industry reported on Wednesday that India’s Wholesale Price Index (WPI) inflation fell to 0.85% in April from 2.05% in March—a 13-month low and well below market expectations of 1.76%. The ministry attributed April’s positive inflation rate mainly to price increases in food manufacturing, chemicals, transport equipment, and machinery.
Despite the easing inflation data, global cues continue to dominate market direction. San Francisco Federal Reserve President Mary Daly remarked that the current strength of the US economy allows the Fed to remain patient with its policy decisions. Her comments came ahead of a highly anticipated speech by Fed Chair Jerome Powell, scheduled for later Thursday.
Traders are also eyeing the release of top-tier US economic indicators, including April’s Retail Sales and Producer Price Index (PPI). These data points will offer fresh insights into inflationary pressures and consumer demand in the world’s largest economy.
According to LSEG data, markets now see a 74% probability of the Federal Reserve initiating its first 25-basis-point rate cut in September, a shift from earlier bets for a July move.
As the Asian session progressed, the Indian Rupee maintained a firm tone, but market participants remained cautious ahead of the US data dump. Further direction for USD/INR will likely hinge on the retail sales, PPI readings, and Powell’s remarks.
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