May 20, 2025
New Delhi, India
USDINR ANALYSIS
CurrencyVeda provides this news article for informational purposes only. We do not offer investment advice. Please consult with financial experts before making any investment decisions.
Rupee Slips on Dovish RBI Expectations, Eyes on Fed Commentary
The Indian Rupee edged lower during Tuesday’s early European session as market participants priced in extended rate cuts by the Reserve Bank of India (RBI). This comes after India’s consumer inflation for April dropped more than expected, nearing a six-year low, fueling dovish sentiment around the RBI’s policy outlook.
Adding to the pressure were geopolitical trade concerns, especially fears of a potential return of US tariffs under a Trump-led administration, which could weigh broadly on Asian currencies, including the INR.
Trade Deal May Cushion Rupee Fall
Despite the negative cues, the Rupee’s losses may be limited. A multi-phase trade agreement is reportedly in the works between India and the US. According to Bloomberg, India aims to finalize an interim deal before July, ahead of the possible imposition of reciprocal US tariffs. The initial phase of the deal is expected to cover market access for industrial goods, selected farm products, and relaxation of non-tariff barriers such as quality control standards.
Oil Prices Offer Relief
A dip in global crude oil prices may also lend support to the Rupee. As the world’s third-largest oil importer, India benefits from cheaper oil, which eases its trade deficit and supports the currency.
Focus on Fed Commentary
Investors now await key commentary from US Federal Reserve officials later on Tuesday. Among those scheduled to speak are Thomas Barkin, Alberto Musalem, Adriana Kugler, Raphael Bostic, Mary C. Daly, and Beth M. Hammack. Their remarks could influence expectations on future US interest rate moves, further impacting USD/INR dynamics.
India’s Growth Outlook
Meanwhile, domestic economic projections remained cautious. Rating agency ICRA expects India’s GDP growth at 6.9% for the March quarter and 6.3% for the full fiscal year 2024-25, falling short of the NSO’s earlier estimates.
US Rating Downgrade Looms in Background
Adding to global uncertainty, Moody’s recently downgraded the US sovereign rating from ‘Aaa’ to ‘Aa1’, citing prolonged fiscal indiscipline and rising interest costs—a move that has stirred volatility across global markets.
Disclaimer:
CurrencyVeda provides this news article for informational purposes only. We do not offer investment advice or recommendations. Before making any investment decisions, please conduct thorough research, consult with financial experts, and carefully consider your financial situation, risk tolerance, and investment goals. Investing in the stock market carries risks, and it’s essential to make informed choices based on your individual circumstances. CurrencyVeda is not liable for any actions taken based on the information provided in this article.
