The USD/INR pair traded higher at around 86.70 during the Asian trading session on Friday, supported by increased demand for the US Dollar (USD) from importers. Market participants are awaiting the release of India’s Wholesale Price Index (WPI) inflation data and US Retail Sales for January later in the day to gain further market direction.
On Thursday, US President Donald Trump revealed that Indian Prime Minister Narendra Modi had expressed interest in discussing measures to reduce tariffs and increase imports of US oil and gas in an effort to narrow the trade deficit between the two nations. This development is likely to draw attention from market players, with any signs of escalating trade tensions between the US and India potentially bolstering the USD, a safe-haven asset.
Meanwhile, Foreign Institutional Investors (FIIs) continue to hold around $800 billion worth of Indian equities, but their ongoing selling presents a risk to the Indian stock market. This persistent selling pressure could weigh on the Indian Rupee (INR), providing further support for the USD/INR pair.
However, the upside potential for the USD/INR may be limited due to increased intervention from the Reserve Bank of India (RBI). Since the INR hit a record low of 88 against the Greenback earlier in the week, the Indian central bank has stepped up efforts to sell USD in both the spot and forward markets to stabilize the currency.
Related topics:
Yen Hits Nine-Week High as Markets Brace for U.S. Jobs Report
Asian Markets Decline as Traders Await Key US Jobs Report
IMF Urges Japan to Act Quickly to Address Fiscal Challenges Amid Rising Risks
