May 15, 2025
New Delhi, India
USDINR Analysis
The Indian Rupee regained some lost ground in Friday’s Asian session, snapping a three-day losing streak as softening crude oil prices provided a temporary cushion for the currency. The retreat in oil prices followed reports of progress in US-Iran nuclear deal talks, which could increase global supply and ease cost pressures.
Given that India is the world’s third-largest oil importer, lower crude prices directly benefit its trade balance and currency valuation. However, the upside for the INR remains limited due to steady demand for the US Dollar from importers and sustained foreign fund outflows, according to forex traders.
The dollar-rupee overnight swap rate also declined, reflecting a rise in cash dollar demand—often a signal of increased capital outflows.
Looking ahead, traders will closely monitor key US macroeconomic indicators due later on Friday, including Building Permits, Housing Starts, and the preliminary reading of the University of Michigan Consumer Sentiment Index. Additionally, comments from US Federal Reserve official Thomas Barkin could offer further cues on the interest rate trajectory.
Meanwhile, recent US economic data showed cooling inflation. The Producer Price Index (PPI) rose 2.4% year-on-year in April, down from 2.7% in March and below the expected 2.5%. Weekly Initial Jobless Claims stood at 229,000, matching expectations, while Continuing Claims edged up by 9,000 to 1.881 million.
On the geopolitical front, India’s efforts to finalize a trade deal with the US remain in focus, especially within the 90-day window set by President Trump after pausing tariff hikes on major trading partners.
Despite today’s bounce, currency experts caution that unless foreign inflows resume and global risk appetite improves, the rupee may face resistance in sustaining its gains.
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