The Indian rupee weakened against the US dollar on Thursday as investors positioned ahead of India’s GDP data release, with traders bracing for potential volatility. The dollar gained strength, supported by firm US Treasury yields and cautious sentiment in emerging markets.
Market participants remained cautious as expectations for India’s economic growth varied, with analysts watching for signs of resilience or slowdown in the post-pandemic recovery. At the same time, the Federal Reserve’s hawkish stance on interest rates continued to lend strength to the greenback, making emerging market currencies less attractive.
Foreign fund outflows from Indian equities added to the rupee’s woes, as global investors sought safer assets amid lingering macroeconomic uncertainties. Risk aversion in global markets has contributed to the rupee’s downside, with traders closely monitoring cues from the Reserve Bank of India (RBI) on potential policy adjustments.
Meanwhile, a rise in crude oil prices has further pressured the rupee, given India’s reliance on energy imports. Higher oil prices tend to widen the country’s trade deficit, fueling concerns over further depreciation in the rupee against the dollar.
With the GDP data release imminent, traders are keeping an eye on whether the economic figures will exceed or fall short of expectations. A stronger-than-expected print could offer some support to the rupee, while any signs of economic slowdown may exacerbate its weakness.
Looking ahead, volatility in USD/INR is expected to persist, with global economic trends, US monetary policy, and domestic growth figures shaping near-term movements in the currency pair.
