Recent forecasts for the USD to INR exchange rate indicate a complex interplay of factors influencing both currencies. The US dollar has experienced upward momentum as safe-haven flows have intensified amid a broader risk-averse market sentiment. Analysts highlight that the introduction of increased US tariffs on Indian goods, rising from 25% to 50%, is pressuring the Indian rupee. As a result, the USD has reached 14-day highs near 87.69, which is 1.4% above its three-month average of 86.45.
Market sentiment is further shaped by upcoming economic data releases, including the US GDP growth estimate and jobless claims figures that could significantly affect the USD valuation. Economists note that the transition in Federal Reserve leadership is creating additional uncertainty, particularly regarding potential shifts in monetary policy that could arise from the anticipated inflation data.
For the Indian rupee, the situation remains challenging, primarily due to increased dollar purchases by oil importers, which has contributed to a recent decline. Despite foreign banks consistently selling dollars and providing some support to the rupee, the combination of escalating US tariffs and market uncertainty has resulted in pressure on the INR. Analysts point to upcoming tax cuts proposed by the Indian government as a possible short-term stimulus that could provide some support, but the overall outlook remains cautious.
In summary, the USD to INR rates are at a critical juncture, with the dollar benefiting from heightened risk aversion and geopolitical tensions influencing the rupee's stability. Market participants should closely monitor economic announcements and geopolitical developments that could further impact the exchange rate in the coming weeks.
