USD/INR depreciates after registering more than 0.5% gains in the previous session. The Indian Rupee (INR) gains ground amid speculation of the Reserve Bank of India (RBI) intervention, aiming to curb losses as the pair touched a fresh all-time high of 92.19 on January 28.
The INR’s weakness was driven by broad weakness in Asian currencies as the US Dollar strengthened after US Treasury Secretary Scott Bessent reaffirmed the US commitment to a strong dollar policy. Additionally, the Indian Rupee (INR) could face pressure from dollar demand driven by maturing NDF positions and month-end importer buying.
Reuters quoted a Singapore-based hedge fund portfolio manager as saying he was surprised by the magnitude of the move, noting that markets appear to be pre-empting upcoming NDF maturities and that stop-loss orders may have been triggered. He added that the key question is how the Reserve Bank of India (RBI) will respond if the rupee weakens beyond 92.00, whether it allows the USD/INR pair to reprice higher or intervenes to pull it back.
The Indian Rupee (INR) failed to find support from improved sentiment following the India–EU trade deal, which is expected to lower tariffs on most Indian exports. India has also decided to cut tariffs on EU car imports to 40% from as high as 110%.
Most economists polled by Reuters expect the Reserve Bank of India (RBI) to keep its key policy rate at 5.25% through 2026, as the central bank evaluates the economic impact of previous interest rate cuts.
US Dollar struggles despite reaffirmed commitment to a strong dollar policy
- The US Dollar Index (DXY), which measures the value of the US Dollar against six major currencies, is losing ground after registering over 0.5% gains in the previous session and trading near 96.10 at the time of writing.
- However, the Greenback found support after Treasury Secretary Scott Bessent reaffirmed the US commitment to a “strong dollar policy,” pushing back against earlier comments from US President Donald Trump that suggested tolerance for a weaker currency. Bessent stressed that solid US fundamentals and sound policy settings should continue to draw capital inflows, rejecting speculation of any US intervention to sell dollars against the Japanese Yen (JPY).
- The US Federal Reserve (Fed) decided to keep interest rates unchanged at its January meeting on Wednesday, pointing to still-elevated inflation and resilient economic growth.
- Fed Chair Jerome Powell noted during the post-meeting press conference that job gains have moderated and the unemployment rate has shown signs of stabilization, adding that the Fed is “well positioned” to assess incoming data on a meeting-by-meeting basis and remains off a preset path for future rate decisions.
- Meanwhile, Morgan Stanley analysts said in a note that further policy easing largely hinges on clear evidence of disinflation, which they expect to emerge later in 2026. As a result, they maintain their forecast for rate cuts in June and September.
- US President Donald Trump would soon announce his nominee to replace Fed Chair Jerome Powell, fueling speculation that the next chair could favor faster interest rate cuts.
- Indian Prime Minister Narendra Modi’s government has agreed to immediately cut duties on select vehicles priced above EUR 15,000, with rates set to gradually fall to 10%, easing market access for automakers such as Volkswagen, Mercedes-Benz, and BMW.
- The US could remove the 25% punitive tariffs imposed on India in mid-2025 for purchasing Russian Oil, following comments by US Treasury Secretary Scott Bessent on the sidelines of the World Economic Forum in Davos last week, which fueled speculation about easing trade tensions.
- RBI’s INR 1 lakh crore liquidity infusion via government bond purchases is expected to stabilize funding conditions. With the Union Budget and clarity on US–India trade timelines pending, markets are likely to stay cautious, according to Reuters.
USD/INR edges lower after pulling back from record highs above 92.00
USD/INR is trading around 92.00 at the time of writing. Daily chart analysis points to a sustained bullish bias, with the pair rising within an ascending channel pattern. However, the 14-day Relative Strength Index (RSI) at 74.00 signals overbought conditions, suggesting the pair may be overstretched in the near term. This increases the risk of a corrective pullback or consolidation, even as the broader trend remains bullish.
Immediate resistance is seen at the January 28 all-time high of 92.19, followed by the upper boundary of the ascending channel near 92.70. On the downside, the initial support lies at the lower channel support around 91.60, followed by the nine-day Exponential Moving Average (EMA) at 91.48.
USD/INR: Daily ChartUS Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | INR | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.36% | -0.32% | -0.24% | -0.32% | -0.78% | -0.57% | -0.10% | |
| EUR | 0.36% | 0.04% | 0.11% | 0.05% | -0.42% | -0.21% | 0.28% | |
| GBP | 0.32% | -0.04% | 0.08% | 0.02% | -0.48% | -0.27% | 0.20% | |
| JPY | 0.24% | -0.11% | -0.08% | -0.08% | -0.54% | -0.35% | 0.14% | |
| CAD | 0.32% | -0.05% | -0.02% | 0.08% | -0.46% | -0.26% | 0.23% | |
| AUD | 0.78% | 0.42% | 0.48% | 0.54% | 0.46% | 0.21% | 0.65% | |
| NZD | 0.57% | 0.21% | 0.27% | 0.35% | 0.26% | -0.21% | 0.46% | |
| INR | 0.10% | -0.28% | -0.20% | -0.14% | -0.23% | -0.65% | -0.46% |
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).
Central banks FAQs
Central Banks have a key mandate which is making sure that there is price stability in a country or region. Economies are constantly facing inflation or deflation when prices for certain goods and services are fluctuating. Constant rising prices for the same goods means inflation, constant lowered prices for the same goods means deflation. It is the task of the central bank to keep the demand in line by tweaking its policy rate. For the biggest central banks like the US Federal Reserve (Fed), the European Central Bank (ECB) or the Bank of England (BoE), the mandate is to keep inflation close to 2%.
A central bank has one important tool at its disposal to get inflation higher or lower, and that is by tweaking its benchmark policy rate, commonly known as interest rate. On pre-communicated moments, the central bank will issue a statement with its policy rate and provide additional reasoning on why it is either remaining or changing (cutting or hiking) it. Local banks will adjust their savings and lending rates accordingly, which in turn will make it either harder or easier for people to earn on their savings or for companies to take out loans and make investments in their businesses. When the central bank hikes interest rates substantially, this is called monetary tightening. When it is cutting its benchmark rate, it is called monetary easing.
A central bank is often politically independent. Members of the central bank policy board are passing through a series of panels and hearings before being appointed to a policy board seat. Each member in that board often has a certain conviction on how the central bank should control inflation and the subsequent monetary policy. Members that want a very loose monetary policy, with low rates and cheap lending, to boost the economy substantially while being content to see inflation slightly above 2%, are called ‘doves’. Members that rather want to see higher rates to reward savings and want to keep a lit on inflation at all time are called ‘hawks’ and will not rest until inflation is at or just below 2%.
Normally, there is a chairman or president who leads each meeting, needs to create a consensus between the hawks or doves and has his or her final say when it would come down to a vote split to avoid a 50-50 tie on whether the current policy should be adjusted. The chairman will deliver speeches which often can be followed live, where the current monetary stance and outlook is being communicated. A central bank will try to push forward its monetary policy without triggering violent swings in rates, equities, or its currency. All members of the central bank will channel their stance toward the markets in advance of a policy meeting event. A few days before a policy meeting takes place until the new policy has been communicated, members are forbidden to talk publicly. This is called the blackout period.
Source: https://www.fxstreet.com/news/usd-inr-pulls-back-from-fresh-record-highs-despite-asian-weakness-202601290408
