- The Indian Rupee weakens in Friday’s early European session.
- HSBC India Manufacturing PMI eased to 57.1 in February vs. 57.7 prior; Services PMI improved during the same reported period.
- Foreign outflows and the renewed Greenback demand undermine the INR.
- The preliminary US PMI report for February will be the highlight later on Friday.
The Indian Rupee (INR) loses ground on Friday after reaching a one-week high in the previous session. The latest data released on Friday showed that the HSBC India Manufacturing Purchasing Managers Index (PMI) eased to 57.1 in February from 57.5 in January. Additionally, the Indian Services PMI rose to 61.1 in February versus 56.5 prior. The Composite PMI improved to 60.6 in February from 57.7 in January. The local currency remains weak in an immediate reaction to the mixed PMI data.
Foreign Portfolio Investment (FPI) outflows and the renewed Greenback demand weigh on the local currency. The recovery in crude oil prices might also contribute to the INR’s downside as India is the world’s third-largest oil consumer. Any significant depreciation of the Indian Rupee might be limited amid the likely intervention by the Reserve Bank of India (RBI).
Traders await the advanced US S&P Global PMI, Existing Home Sales and Michigan Consumer Sentiment Index report, which will be released later on Friday. Also, the Federal Reserve’s (Fed) Mary Daly and Philip Jefferson are set to speak on the same day.
Indian Rupee softens amid multiple headwinds
- India’s growth is estimated to slow to 6.4% in 2025 from 6.6% in 2024, as new US tariffs and softening global demand weigh on exports, said Moody’s Analytics on Thursday.
- US President Donald Trump said on Wednesday he will announce fresh tariffs within the next month, adding lumber and forest products to previously announced plans to impose duties on imported cars, semiconductors and pharmaceuticals.
- The US Initial Jobless Claims for the week ending February 15 rose to 219,000, compared to the previous week’s 214,000 (revised from 213,000), according to the US Department of Labor (DoL) on Thursday. This figure came in above the market consensus of 215K.
- Fed Board Governor Adriana Kugler said late Thursday that US inflation still has “some way to go” to reach the central bank’s 2% target and that its path toward that goal continues to be bumpy.
- St. Louis Fed President Alberto Musalem said the risk of inflation could remain high, adding that he needs confidence that inflation is waning to support more rate cuts.
USD/INR bulls take a breather
The Indian Rupee trades on a weaker note on the day. The USD/INR pair paints the positive picture on the daily chart, with the price holding above the key 100-day Exponential Moving Average (EMA). However, further consolidation or downside cannot be ruled out as the 14-day Relative Strength Index (RSI) stands below the midline near 48.0.
The immediate resistance level for USD/INR emerges at the 87.00 psychological level. Bullish candlesticks and sustained trading above this level could set its sights on an all-time high near 88.00, en route to 88.50.
On the flip side, if the pair can’t hold the line at 86.35, the low of February 12, a drop toward 86.14, the low of January 27, could be on the cards. The next contention level to watch is 85.65, the low of January 7.
