USD/INR: How Did the Indian Rupee Fare Against the US Dollar on June 27, 2025?

The Indian Rupee (INR) is experiencing a positive surge against the US Dollar (USD) this Friday, building on a two-week high. This upward trend for the INR is primarily driven by a weakening US Dollar and robust foreign investment flowing into India.

US Dollar Under Pressure

The US Dollar is facing headwinds following US President Donald Trump's recent criticisms of the Federal Reserve (Fed) and its Chairman, Jerome Powell. Trump's remarks, which questioned the Fed's independence and suggested potential replacements for Powell, have fueled speculation that future interest rate decisions might be influenced by political agendas rather than purely economic factors.

This has led investors to reassess the US Dollar's strength, pushing the US Dollar Index (DXY) to a three-and-a-half-year low. Market probabilities for a Fed interest rate cut in July have also increased significantly.

Indian Rupee Bolstered by Domestic Factors

On the domestic front, the Indian Rupee is finding strong support. A significant factor is the continued inflow of foreign capital, with Foreign Institutional Investors (FIIs) purchasing a substantial ₹12,594.38 crores in Indian equities on Thursday. This marks the highest such figure this month and has propelled Indian stock indices to year-to-date highs.

Furthermore, a decline in global oil prices is benefiting the Indian Rupee. With oil prices near a two-week low after a nearly 16% drop following an Israel-Iran ceasefire announcement, countries like India, which are major oil importers, are seeing their currencies strengthen.

Economic Outlook and Upcoming Events

While India remains the world's fastest-growing major economy, economists project a slight moderation in GDP growth for the current financial year to 6.4%, down from 6.5% last year. Despite the Reserve Bank of India's (RBI) proactive interest rate cuts, this would represent the most modest growth since the pandemic-hit 2020-2021 period. However, strong government spending is expected to mitigate the slowdown.

Looking ahead, key events that could impact the Indian Rupee include trade talks between Washington and New Delhi, set to occur before the July 9 deadline for reciprocal tariffs. In the US, investors are keenly awaiting the Personal Consumption Expenditure Price Index (PCE) data for May, which is the Fed's preferred inflation gauge.

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Conclusion

The Indian Rupee's current upward momentum against the US Dollar is a confluence of a weakened greenback due to political interference in the Fed and strong domestic fundamentals, including robust foreign inflows and lower oil prices. While a slight moderation in GDP growth is anticipated, India's economic resilience and upcoming trade discussions will be crucial factors to watch in the coming days.

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