The Indian Rupee remained under pressure on Thursday as the U.S. Dollar demand picked up, keeping the USD/INR pair above 86.50. Investors sought safety in the greenback amid growing concerns over global economic uncertainty and expectations of prolonged higher interest rates from the Federal Reserve.
The U.S. Dollar Index (DXY) remained firm, reflecting investor preference for the world’s reserve currency amid volatility in emerging markets. Stronger-than-expected U.S. economic data, including robust labor market figures and steady inflation, reinforced expectations that the Fed may delay rate cuts, further boosting dollar strength.
Meanwhile, the Rupee’s depreciation was also fueled by persistent outflows from Indian equity markets. Foreign investors continued reducing their exposure to Indian assets, adding pressure on the local currency. Rising global oil prices also weighed on India’s trade balance, increasing demand for dollars to settle import payments.
Despite the rupee’s weakness, Reserve Bank of India (RBI) interventions provided some stability, preventing sharp declines in the currency. Market participants believe the central bank may step in further to curb excess volatility if the pair approaches key resistance levels.
Looking ahead, traders are closely watching upcoming U.S. inflation data and Fed commentary, which could influence further dollar moves. In India, domestic economic indicators, including industrial production and CPI figures, will be key in shaping the rupee’s near-term outlook.
For now, USD/INR remains well-supported, with market sentiment favoring continued dollar strength unless a shift in global risk appetite or central bank policy changes the trajectory.
