The Indian Rupee (INR) opened lower against the US Dollar (USD) on Thursday, with the USD/INR pair edging up to near 88.50. The Rupee is expected to face significant pressure amid growing expectations that the Reserve Bank of India (RBI) may ease monetary policy conditions in its December policy meeting.
Speculation about a dovish RBI stance intensified following the release of October’s retail Consumer Price Index (CPI) data on Wednesday. The report showed retail inflation decelerated at a faster-than-expected rate, coming in at just 0.25% year-on-year. This slowdown was largely driven by soft food prices and tax cuts on consumer goods announced in the third quarter. Notably, this marks the second consecutive month in which inflation has fallen below the RBI’s tolerance range of 2% to 6%.
“To prevent the economy from slipping into sluggish and weak growth, the RBI may opt for a 25 to 50 basis points cut in the repo rate in its December 2025 monetary policy,” said Devendra Pant, chief economist at India Ratings and Research, as reported by Reuters.
Lower interest rates by the RBI typically weigh negatively on the Indian Rupee. Additionally, continuous foreign fund outflows from the Indian stock market are adding to the currency’s pressure. Foreign Institutional Investors (FIIs) have been net sellers across all three trading days this week, with Wednesday alone seeing FIIs trimming stakes worth Rs. 1,750.03 crore.
Looking ahead, investors will turn their focus to the Wholesale Price Index (WPI) inflation data for October, which is scheduled for release on Friday.
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### Daily Market Movers: Indian Rupee Underperforms Against US Dollar
The Indian Rupee weakened against the US Dollar despite the latter trading cautiously against its major currency peers. At the time of writing, the US Dollar Index (DXY)—which measures the Greenback’s value against six major currencies—was trading flat, slightly above a 10-day low of 99.30.
The US Dollar has been under pressure amid growing market confidence that the Federal Reserve (Fed) will cut interest rates again in the December policy meeting. According to the CME FedWatch tool, the probability of a 25 basis points (bps) rate cut to 3.50%-3.75% has risen to 67% from 62% a week ago.
This dovish Fed outlook was further supported by the latest ADP Employment Change four-week average data, which revealed that private employers laid off 11,250 workers per week through late October.
However, some Federal Open Market Committee (FOMC) members have been advocating for holding rates steady. On Wednesday, Boston Federal Reserve President Susan Collins noted that recent rate cuts have set a high bar for further easing, citing inflation risks. Speaking at the Greater Boston Chamber of Commerce, Collins said, “It will likely be appropriate to keep policy rates at the current level for some time to balance the inflation and employment risks in this highly uncertain environment,” Reuters reported.
Meanwhile, the US government reopened following the longest shutdown in history after President Donald Trump signed the federal funding bill. This reopening paves the way for the resumption of key economic releases that had been delayed due to the shutdown.
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### Technical Analysis: USD/INR Eyes All-Time High Above 89.00
The USD/INR pair rose to near 88.85 in early Thursday trading. The near-term trend remains bullish as the pair sustains levels above the 20-day Exponential Moving Average (EMA), currently around 88.66.
The 14-day Relative Strength Index (RSI) is attempting to climb back above the 60.00 level — a move that would signal renewed bullish momentum.
On the downside, the August 21 low of 87.07 is an important support level for the pair. To the upside, the all-time high of 89.12 serves as a critical resistance barrier that USD/INR will aim to revisit if the current bullish trend continues.
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Investors and traders should keep an eye on upcoming economic data and central bank announcements, as these will play key roles in shaping the trajectory of the Indian Rupee in the near term.
https://bitcoinethereumnews.com/finance/indian-rupee-ticks-lower-as-indias-soft-retail-inflation-data-boosts-dovish-rbi-bets/
