Outlook
The INR is seen staying in a cautious, range-bound path near current levels. Export gains from the US-India trade partnership and RBI's flexible exchange-rate stance support the rupee's resilience, while geopolitical tensions and ongoing trade deficits with FPI outflows cap upside. In current action, INR pairs edge within narrow bands; a major policy signal or a risk-on/risk-off shift could shift the bias.
Key drivers
- US-India Trade Agreement boosts exports; pharma +14% and technology services +9% to the US.
- RBI's Flexible Exchange Rate Policy allows gradual depreciation to absorb external shocks.
- Geopolitical Tensions between India and Pakistan raise risk aversion and USD demand.
- Persistent Trade Deficit and FPI Outflows keep depreciation pressure as capital seeks higher returns.
Range
INR/USD near 0.011014 (14-day low), 3-month avg 0.011071; trading range 0.010864-0.011270.
INR/EUR 0.009343, 3-month avg 0.00944; range 0.009085-0.009778.
INR/GBP 0.008162, 3-month avg 0.00823; range 0.007872-0.008623.
INR/JPY 1.7038, 3-month avg 1.7279; range 1.6648-1.7759.
What could change it
- A significant development in the US-India trade relationship that alters export momentum.
- A clearer RBI policy signal or intervention that shifts the rate path.
- A sustained change in global risk appetite driving USD demand and capital flows.
- Movements in oil prices or the broader current account that affect India's external balance.
- Shifts in foreign portfolio flows (net inflows support INR; persistent outflows weigh).
