The Indian Rupee (INR) ticks lower against the US Dollar (USD) on Friday. The USD/INR edges up to near 95.72 as elevated oil prices have outweighed a weak US Dollar.
At press time, the MCX Crude Oil contract expiring on September 21 trades 0.6% higher at around Rs. 8,350, closer to its over three-week high of Rs. 8,404 posted on Thursday.
Currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs, tend to underperform in a high-oil-price environment.
As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, is down 0.2% to near 99.63. The USD Index trades close to its three-month low of 98.56.
US Dollar Price This week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the weakest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | INR | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -1.19% | -0.96% | -0.37% | -0.99% | -1.01% | 0.29% | -1.59% | |
| EUR | 1.19% | 0.37% | 0.84% | 0.20% | 0.13% | 1.12% | -0.40% | |
| GBP | 0.96% | -0.37% | 0.54% | -0.17% | -0.24% | 1.10% | -0.82% | |
| JPY | 0.37% | -0.84% | -0.54% | -0.62% | -0.71% | 0.80% | -1.25% | |
| CAD | 0.99% | -0.20% | 0.17% | 0.62% | -0.08% | 1.42% | -0.65% | |
| AUD | 1.01% | -0.13% | 0.24% | 0.71% | 0.08% | 1.51% | -0.58% | |
| INR | -0.29% | -1.12% | -1.10% | -0.80% | -1.42% | -1.51% | -2.11% | |
| CHF | 1.59% | 0.40% | 0.82% | 1.25% | 0.65% | 0.58% | 2.11% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Oil prices remain elevated amid US-Iran deadlock
Global Oil prices remain at their higher levels as both the US and Iran seem least interested in resuming talks regarding the reopening of the Strait of Hormuz, a critical chokepoint for almost 20% of global energy supply.
On Wednesday, US President Donald Trump warned of measures to isolate Iran from the global financial system and severe economic consequences to nations if seen supporting the nation.
“ANY country that allows its financial institutions, businesses, airports, or government entities to provide any type of lifeline to Iran will itself face TREMENDOUS Economic Consequences. Oil smuggling, swap lines, cash transfers, exchange houses, ship registries, front companies — it all needs to stop NOW. You know who you are,” US President Trump wrote on Truth Social.
According to TD Securities, “energy market tightness persists,” with analysts warning that stalled diplomacy and mounting geopolitical frictions are keeping supply risks elevated. They note that “negotiations on hold for weeks and a shift toward economic pressure suggests crude flows in the market will remain critically tight, and Iranian aggression in the Oman lane will likely remain the norm,” reinforcing concerns over constrained seaborne exports.
USD slides as Treasury buyback push caps yields but dents credibility
Brown Brothers Harriman’s Elias Haddad notes that the “USD is down against all major currencies” at the start of the session, with “global stocks and bonds… up.” He points out that longer-term US yields have eased, as “longer term Treasury yields edged a bit lower after yesterday’s rise with 30-year yields modestly below Wednesday’s buyback announcement levels.”
Haddad highlights the policy backdrop, recalling that “yesterday, Treasury Secretary Scott Bessent warned the buyback operation could be larger than the $4bn announced, while touting the ‘big toolkit’ at his disposal to tame the Treasury market.” At the same time, Bessent “attempted to ease concerns over US fiscal policy noting the White House would announce at the end of this week or early next week ‘an increased focus on fiscal consolidation.’”
However, BBH cautions that the fiscal narrative remains unconvincing. “The Congressional Budget Office (CBO) offers little evidence of fiscal consolidation, projecting historically large budget deficits and debt rising to a record 120% of GDP by 2036.” In their view, “without credible spending cuts or revenue increases, the White House plan risks being little more than putting lipstick on a pig.”
“Regardless, the boost to the Treasury’s buyback operation and the threat of more measures should help cap long-end Treasury yields,” Haddad argues. “But the relief comes with a credibility cost that translates to a weaker USD.” BBH warns that “the Treasury’s intervention blurs the lines between improving market functioning and suppressing borrowing costs to contain fiscal stress,” leaving the Dollar vulnerable even as the authorities seek to stabilize the long end of the curve.
India’s flash Composite PMI rises at a faster pace
India’s preliminary HSBC Composite Purchasing Managers’ Index (PMI) data for August has come in higher than expected. The Composite PMI arrives at 54.6, higher than estimates of 54.4 and the July reading of 54.3.
A stronger-than-projected increase in service sector activity helped the overall business expand at a faster pace. The Services PMI expanded to 54.5 from 53.3 in July.
The manufacturing sector activity also expanded but at a moderate pace. The Manufacturing PMI came in lower at 52.9 than the prior release of 53.5. It was expected to rise at a faster pace to 54.0.
Technical Analysis: USD/INR stays above 20-day EMA
In the daily chart, USD/INR has remained in a range between 95.49 and 95.87 for the past few trading days. The pair holds a mildly bullish near-term bias as price remains above the 20-period exponential moving average (EMA) at 95.57, suggesting underlying demand on dips.
The Relative Strength Index (RSI) at 55 sits just above its midpoint, hinting at modest upward momentum without stretching into overbought territory.
On the downside, immediate support is located at the 20-day EMA around 95.57, where buyers are likely to defend the recent advance. With no clear technical resistance levels provided in the current dataset, upside progress would depend on whether bulls can sustain closes above the short-term average and drive the RSI further into positive territory.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Indian Rupee FAQs
The Indian Rupee (INR) is one of the most sensitive currencies to external factors. The price of Crude Oil (the country is highly dependent on imported Oil), the value of the US Dollar – most trade is conducted in USD – and the level of foreign investment, are all influential. Direct intervention by the Reserve Bank of India (RBI) in FX markets to keep the exchange rate stable, as well as the level of interest rates set by the RBI, are further major influencing factors on the Rupee.
The Reserve Bank of India (RBI) actively intervenes in forex markets to maintain a stable exchange rate, to help facilitate trade. In addition, the RBI tries to maintain the inflation rate at its 4% target by adjusting interest rates. Higher interest rates usually strengthen the Rupee. This is due to the role of the ‘carry trade’ in which investors borrow in countries with lower interest rates so as to place their money in countries’ offering relatively higher interest rates and profit from the difference.
Macroeconomic factors that influence the value of the Rupee include inflation, interest rates, the economic growth rate (GDP), the balance of trade, and inflows from foreign investment. A higher growth rate can lead to more overseas investment, pushing up demand for the Rupee. A less negative balance of trade will eventually lead to a stronger Rupee. Higher interest rates, especially real rates (interest rates less inflation) are also positive for the Rupee. A risk-on environment can lead to greater inflows of Foreign Direct and Indirect Investment (FDI and FII), which also benefit the Rupee.
Higher inflation, particularly, if it is comparatively higher than India’s peers, is generally negative for the currency as it reflects devaluation through oversupply. Inflation also increases the cost of exports, leading to more Rupees being sold to purchase foreign imports, which is Rupee-negative. At the same time, higher inflation usually leads to the Reserve Bank of India (RBI) raising interest rates and this can be positive for the Rupee, due to increased demand from international investors. The opposite effect is true of lower inflation.
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