USD/INR FANLS as traders are preparing for US-India commercial talks

The Indian rupe strengthens in an early European session.
Perspectives of the influx of foreign equity and weaker American dollar are at the root of INR.
Investors will monitor strictly if the Trump administration reaches novel trade agreements with India.

Indian rupe (INR) edges higher on Monday. Renewed foreign inflows and weakness of the US dollar (USD) still support the local currency. The fears of the economic impact of novel tariffs on the US economy dragged Greenback below.

US Vice President JD Vance arrives on Monday to New Delhi among the global trade war, which was caused by US President Donald Trump. The US threatens to raise 10% of tariffs to Indian export to 26% if Trump introduced Trump to the end of the 90-day break at the beginning of this month. Vance is to meet Prime Minister of India Narendra Modi later on the same day. Conversations between two leaders will probably focus on the early finalization of the proposed commercial pact and ways to strengthen India’s relations.

The novel Delhi official told Bloomberg News that commercial negotiations specific to the sector will start this week to conduct these talks until the end of May. Finance Minister Nirmala Sitharaman will also take part in the IMF meetings in Washington, where he is expected to discuss trade with the best US officials.

Meanwhile, Hawkish Notes from the American Federal Reserve (FED) reduced the likelihood of lowering the FED rate in June, which can raise USD in the near future. In addition, Markets will watch the Bank of the India Reserve (RBI), which seems to buy USD to limit the boost in INR. The Richmond Fed production index in April is to be written on Tuesday. On Wednesday, the Indian Index of HSBC purchasing managers (PMI) in April and the American global PMI report will be the most essential events.

Indian rupe trads stronger among the unpredictable American tariffs

“The key thing to see is whether (USD/INR) breaks below 85 and has there,” said the banking trader at the bank. “If so (yes), I expect the exporters quickly enter – especially considering how much pressure the dollar is.”
Dr. VK Vijayakumar, the main investment strategist at Geojit Financial Services, noted that FII and global trends offer support for INR. “This reversal caused a weakening dollar indicator and expectations regarding the further softness of the dollar, which encourage FII to switch from the US to emerging markets, such as India,” said Vijayakumar.
Moody’s assessments stated that the Indian economy could boost in a group from 5.5% to 6.5% in the 2025 calendar year, lower than the February forecast 6.6%.
President Fed San Francisco Mary Daling said on Friday that although he still feels comfortable with a few interest rate reductions this year, the growing risk of inflation means that the Fed may require less, especially considering uncertainty about the commercial policy of President Donald Trump.
Financial markets expect the Fed to resume foot reduction in June, and by the end of the year the policy rate, currently in the range of 4.25% -4.50%, will be a full percentage point lower.

Bear USD/INR prejudice remains under the 100-day EMA

The Indian rupe trading a stronger note that day. The USD/INR pair maintains the bear on the daily table, with the price remaining below the key 100-day interpretation of the movable medium (EMA). The shoot is supported by a 14-day relative force indicator (RSI), which stands below the central line near 38.10.

Key level of support for USD/INR Appears in the 85.00-84.95 zone, representing the psychological level and the lower limit of the decreasing trend channel. Violation of this level may reveal 84.53, the lowest of December 6, 2024. Further south, the next target of the defects to watch is 84.22, the lowest November 25, 2024.

On the other hand, the first barrier upside down is 85.87, 100-day EMA. All subsequent purchases above the mentioned level could see the rally to 86.55, the upper border of the trend channel. An additional plus viewing filter is 86.71, the highest level of April 9.

FAQ tariff

Tariffs are customs duties taken for some imports of goods or product category. The tariffs are designed to support local producers to be more competitive on the market, providing price advantage compared to similar goods that can be imported. The tariffs are widely used as tools of protectionism, along with trade barriers and import amounts.

Although both tariffs and taxes generate government income to finance public goods and services, they have several distinctions. The tariffs are paid at the entrance port and the taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and companies, and the tariffs are paid by importers.

There are two schools of thinking among economists regarding the exploit of tariffs. While some say that tariffs are necessary to protect national industries and solve the problem of commercial imbalance, others perceive them as a harmful tool that can potentially boost prices in the long-term perspective and lead to a harmful trade war by encouraging Tit-For Tatt tariffs.

During the fall to the presidential election in November 2024, Donald Trump explained that he was going to exploit the tariffs to support the US and American producers. In 2024, Mexico, China and Canada constituted 42% of total US imports. According to the American office of the population, Mexico was distinguished as the best exporter by $ 466.6 billion. That is why Trump wants to focus on these three nations by applying tariffs. It also plans to exploit revenues generated by tariffs to reduce personal income taxes.