The Indian Rupee (INR) weakens further after a brief pause against the US Dollar (USD) in the opening session on Tuesday. The USD/INR pair jumps to near 94.50 as elevated oil prices continue to hurt the Indian Rupee.
As of writing, the WTI Oil price trades 0.6% higher to near $95.60 and is close to its two-week high of $97 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.
Oil prices have remained higher due to uncertainty over the reopening of the Strait of Hormuz, a critical passage to almost 20% of global energy supply.
According to a Reuters report, oil-linked flows and hedging-related US Dollar demand are key headwinds for the Indian Rupee
Higher oil prices pressure Indian Rupee
The uncertainty regarding the reopening of the Hormuz remains escalated, as Washington has not shown any signs of interest in proposals delivered by Iran to end the war. On late Monday, White House press secretary Karoline Leavitt stated that US President Trump discussed Iran’s proposal with the national security team, which calls for the reopening of the Strait of Hormuz and a permanent ceasefire. Leavitt didn’t reveal any information regarding the odds of whether it will be taken forward by Washington.
“I wouldn’t say they’re considering it. I would just say that there was a discussion this morning that I don’t want to get ahead of, and you’ll hear directly from the president, I’m sure, on this topic,” Leavitt said.
On Monday, US President Trump received another proposal from Iran, which he called “better” than the one, which it was expected to present in canceled peace talks in Islamabad over the weekend, but “still not good enough”.
FIIs remain sellers in Indian stock market
In the last six trading days, Foreign Institutional Investors (FIIs) have remained net sellers and have offloaded their stake worth Rs. 18,291.34 crore after a little buying in the April 15-17 period. FIIs appear to be dumping their stake in the Indian equity market due to elevated oil prices, which have raised concerns over India Inc.’s earnings projections.
Fed to hold interest rates steady
This week, the major trigger for the US Dollar will be the Federal Reserve’s (Fed) monetary policy announcement on Wednesday, in which it is expected to leave interest rates unchanged in the range of 3.50%-3.75% for the third time in a row. Investors will pay close attention to Fed Chair Jerome Powell’s comments regarding the monetary policy outlook in the wake of the energy price shock amid the Hormuz closure.
Technical Analysis: USD/INR remains above 20-day EMA
USD/INR trades higher at around 94.50, maintaining a bullish near-term bias, as it holds above the 20-day Exponential Moving Average (EMA) at 93.53. The positioning above this rising EMA suggests the broader uptrend remains intact, while the Relative Strength Index (RSI) around 61 indicates firm but not overstretched upside momentum.
On the downside, the 20-day EMA at 93.53 stands as the first layer of dynamic support, and a daily close below this level would hint at a deeper corrective phase within the broader trend. Looking up, the pair aims to revisit the all-time high around 95.20. The spot would enter uncharted territory if it manages a decisive break above 95.20.
(The technical analysis of this story was written with the help of an AI tool.)
