The Indian Rupee (INR) trades higher against the US Dollar (USD) on Friday, as the opening of special credit lines for state-run oil buyers to meet their foreign exchange needs has strengthened the Asian currency. The USD/INR pair declines to near 92.70 after remaining sideways in the last two trading days.
On Thursday, the Reserve Bank of India (RBI) urged state-run oil refiners to curb spot dollar purchases and to tap a special credit line, in an attempt to reduce the impact of dollar buying by state-run oil refiners on the domestic currency, Reuters report. This facility was also started by the RBI when the Russia-Ukraine war started.
The Indian central bank has been taking several measures to limit the downside in the Indian Rupee against the US Dollar. In late March, the RBI directed banks to cap their net open rupee positions in the foreign exchange market at $100 million by the end of each business day.
Trump seems confident of a deal with Iran
Oil prices remain capped, and the market sentiment is broadly risk-on as United States (US) President Donald Trump has expressed confidence that a deal with Iran is very likely. “We’re very close to a deal with Iran,” Trump said in a press briefing on Thursday. However, he warned that military actions against Tehran would resume if a deal is not reached.
The overall commentary from US President Trump appeared to be expressing optimism toward a permanent truce with Iran. Trump said that Iran is now “more willing to do things today they previously weren’t”, such as giving up nuclear ambitions and handing over enriched uranium.
Upbeat market sentiment has diminished the safe-haven appeal of the US Dollar. As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades marginally higher to near 98.25, but is set for a consecutive negative weekly close.
Meanwhile, capped WTI Oil prices around $90 from the past few days after surging above $100 is also offering support to the Indian Rupee. Currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs, take a recovery route when oil prices start correcting.
FIIs start buying in Indian stock market
The response by Foreign Institutional Investors (FIIs) toward the Indian equity market appears to start improving since the announcement of the two-week ceasefire between the US and Iran on April 8. In the last two trading days, FIIs have remained net buyers and have raised their stake worth Rs. 1,048.51 crore. However, the amount of investment is significantly lower than the selling pressure seen before the temporary truce announcement.
Technical Analysis: USD/INR sees more downside toward 92.45
USD/INR trades lower at around 92.70, as of writing, holding a mildly bearish near-term bias as spot remains below the 20-period Exponential Moving Average (EMA) at 93.06. The recent pullback from last week’s highs has pushed the price under this short-term trend gauge, and the Relative Strength Index (RSI) at 48.6 has slipped just below the neutral 50 line, hinting that upside momentum is fading without yet signaling oversold conditions.
On the topside, initial resistance is now defined by the 20-day EMA at 93.07, where a daily close above would be needed to ease immediate downside pressure and reopen the path toward recent peaks above 95.00. As long as the pair holds beneath this moving average, rebounds are likely to struggle, leaving risks skewed toward additional consolidation or further slippage in the coming sessions toward the March 3 high of 92.46.
(The technical analysis of this story was written with the help of an AI tool.)
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off” refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
