The Indian Rupee (INR) continued its decline against the US Dollar (USD) on Wednesday, marking its third consecutive day of losses. The USD/INR pair climbed to approximately 93.85, reflecting the underperformance of the Indian currency. This movement occurred despite the extension of a ceasefire between the United States and Iran, which was announced late Tuesday by US President Donald Trump via Truth Social. The ceasefire, initially set to expire on April 22, was extended indefinitely at Pakistan's request until Washington receives a unified proposal from Tehran. However, Trump stated that the US blockade of Iranian sea ports would remain, restricting Iran's business activities and impacting its economy. Iran has maintained that it will not return to peace talks unless the blockade is lifted. The ceasefire extension triggered a broad risk rally, but oil prices remained elevated, with WTI Oil trading near $88.70 after a 1% decline on Wednesday, following a nearly 5% surge on Tuesday. High oil prices have negatively impacted currencies like the INR, as India is heavily reliant on oil imports for its energy needs.
Foreign Institutional Investors (FIIs) continued to be net sellers in the Indian stock market for the second consecutive day on Tuesday. In the first two trading days of the week, FIIs sold stakes worth Rs. 2,978.92 crore, surpassing the Rs. 1,731.71 crore they bought during April 15-17. This trend indicates persistent lackluster interest from foreign investors in Indian equities, despite the shift in the US-Iran conflict to a prolonged standoff.
In the US, Kevin Warsh was officially named the new Chairman of the Federal Reserve on Tuesday, succeeding Jerome Powell. Warsh, in his Senate Banking Committee testimony, emphasized the need for fundamental policy reforms and expressed a preference for a 'smaller balance sheet,' suggesting the possibility of lower interest rates, improved inflation, and a stronger economy.
From a technical perspective, USD/INR maintained a bullish bias, trading above the 20-day exponential moving average at 93.18, with the Relative Strength Index (14) around 56, supporting the short-term uptrend from last week's lows.
CONCLUSION
The Indian Rupee's continued weakness against the US Dollar is driven by persistent high oil prices and ongoing foreign investor outflows, despite a risk rally following the US-Iran ceasefire extension. Market sentiment remains cautious, with technical indicators supporting further USD/INR gains in the near term.