USD/INR: Indian Rupee Climbs as Investors Brace for US Retail Sales, Fed Talk

The USD/INR spot rate is trading lower at 85.61 at 4:20 PM as of April 16, 2025, marking a 0.11% decline (-0.09) on the day. The pair has moved within a tight intraday range of 85.52 to 85.76, reflecting cautious sentiment ahead of key U.S. economic events.

Market Drivers: Dollar Dips, Oil Drops, and Policy Buzz

The US Dollar has been gradually weakening, which is supporting emerging market currencies such as the Indian Rupee. At the same time, the continued decline in oil prices is helping to ease India’s import costs, offering some relief to the trade balance.

Market participants are now turning their attention to two key developments: the upcoming release of the US March Retail Sales data and a scheduled speech by Federal Reserve Chair Jerome Powell. Retail sales are projected to increase by 1.3% month-on-month, as per news reports, while Powell’s remarks will be analysed for insights into the Fed’s stance on future interest rate moves.

Back in India: Positive Momentum Builds

To support liquidity, the Reserve Bank of India (RBI) has announced it will purchase ₹400 billion in bonds and conduct a 43-day repo worth ₹1.5 trillion on Thursday.

Meanwhile, India’s March CPI inflation came in at 3.34% year-over-year—softer than February’s 3.61% and below the market forecast. This lower-than-expected inflation print gives the RBI more room to maneuver without aggressive rate hikes.

Fed Uncertainty Keeps Traders on Edge

Comments from key Fed figures earlier this week added to the uncertainty. Fed Governor Christopher Waller flagged tariffs as a major risk that might justify a rate cut, even with inflation still high. Similarly, Atlanta Fed President Raphael Bostic said the US economy is in a “big pause” and suggested the Fed should hold off on further moves until there’s more clarity.

Conclusion

The Indian Rupee’s recent appreciation reflects a mix of supportive domestic and global factors, including a softer US Dollar, easing crude oil prices, and controlled inflation at home.

With the Reserve Bank of India maintaining liquidity support and inflation staying within target, the INR remains relatively well-positioned in the short term. However, all eyes are now on upcoming US retail sales data and Federal Reserve Chair Jerome Powell’s speech, which could influence global rate expectations and currency market direction.

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