The Indian Rupee (INR) experiences mild losses due to increased demand for the US Dollar (USD) and ongoing foreign fund outflows. The market sentiment is dampened ahead of India’s GDP release, with the currency under pressure from external factors like US tariff announcements.

India’s GDP for the fourth quarter is projected to grow by 6.2%, while the US GDP increased by 2.3% in the same period. The Reserve Bank of India (RBI) is expected to intervene in the foreign exchange market to stabilise the Rupee, particularly if the USD continues to strengthen.

The USD/INR pair remains above the 100-day Exponential Moving Average, indicating a bullish outlook. Resistance is at 87.40, with potential upward movement towards 88.00, while support is found at 86.48, potentially dropping to lower levels if trends reverse.

Inflation and interest rates also play a vital role in influencing the Indian Rupee’s value, affecting both domestic and international perceptions. Foreign investment levels and trade balances further impact the currency, with macroeconomic conditions leading to fluctuations in demand for the Rupee.

With the Indian Rupee showing mild declines, it’s clear that external pressures are weighing on its performance. The strength of the US Dollar, combined with persistent foreign fund outflows, has made currency markets cautious. Adding to this, the anticipation surrounding India’s upcoming GDP release has fuelled uncertainty.

Forecasts place India’s fourth-quarter GDP growth at 6.2%, while the US economy saw a 2.3% increase in the same period. Given this, it wouldn’t be surprising if the Reserve Bank of India steps in to provide stability, especially if the USD continues its upward trajectory. Intervention in the foreign exchange market is a strategy that we’ve seen before when the Rupee shows signs of depreciation beyond acceptable levels.

From a technical perspective, USD/INR remains above the 100-day Exponential Moving Average, pointing towards an overall bullish structure. Resistance sits at 87.40, with a possible climb towards 88.00 if momentum persists. On the downside, support is currently observed at 86.48, and should sentiment change, a further drop could be on the cards.

Beyond technical levels, rising inflation and monetary policy decisions are shaping the Rupee’s movement. Interest rates in particular influence how both domestic and global investors view the currency. Additionally, foreign direct investment and trade balances continue to play their part in dictating demand. Recent macroeconomic conditions have amplified volatility, making it even more important to assess market direction with caution in the weeks ahead.

For traders navigating the derivatives market, watching global sentiment regarding US tariff policies and India’s fiscal outlook will be key. These factors could easily tip the balance one way or the other. While intervention from the central bank remains likely, broader market trends may hold more weight in determining the overall trajectory.