Indian rupee (INR) Market Update
Recent developments in the currency market indicate a mixed landscape for the Indian rupee (INR). The INR has been under pressure as fears surrounding surging energy prices contribute to inflation expectations and potential interest rate hikes. Given that India is the third-largest oil-consuming country, any rise in crude prices markedly impacts domestic inflation, adding further strain on the rupee.
The broader context includes U.S. President Donald Trump's confirmation of proposed tariffs, notably a 26% reciprocal tariff on goods from Taiwan, which has sparked concerns about U.S. growth and triggered a temporary decline in the dollar. Analysts note that this may present a balancing effect on the rupee, with comments from a bank currency trader suggesting that risks to the INR are "broadly balanced" at current levels.
Despite this somewhat stabilizing factor, the Indian rupee has continued to weaken against a backdrop of USD strength. Investors are shedding Asian currencies, including the INR, driven in part by expectations that Trump’s economic policies could stimulate U.S. growth through lower corporate taxes and deregulation. The potential for escalating trade tensions and tariffs, particularly aimed at China, introduces additional uncertainty and volatility in the Asian currency market.
Examining specific currency pairs, the INR to USD is currently at 0.011632, slightly above its 3-month average of 0.011557, with a stable trading range of 2.9%. In contrast, the INR to EUR has dropped to 0.010250, which is 5.7% below its 3-month average, demonstrating volatility across a 10.8% range. The INR to GBP is near 30-day lows at 0.008884, sitting 2.6% below its average, and trading with a relatively stable range. Finally, the INR to JPY at 1.6691 is 4.3% under its 3-month average and has exhibited a volatile range of nearly 10%.
Overall, market experts underscore the ongoing pressures facing the Indian rupee due to external factors and internal economic conditions, suggesting that caution is warranted for individuals and businesses engaging in international transactions involving the INR.