Indian Rupee (INR) has been on a losing streak against the US dollar in the last two months, shedding 0.54 percent in March and 0.10 percent in April. This has largely been attributed to the hot US inflation data that diminished the chances of interest rate cuts in the third quarter of the year. The rally saw the USDINR currency pair reach an all-time high of 83.75 on April 19, and the upward momentum still remains despite a slight decline from the peak. In addition, 50 MA on the pair is well above the 200 MA, signaling a strong bullish control. The pair trades at 83.48 as of this writing.
The constant interventions from the Reserve Bank of India provided support to the rupee much at the first twelve weeks of 2024, keeping the rate below 83.50. However, the dollar’s resilience finally broke the resistance on March 22nd, and it has been on a general upward trajectory on the daily chart, with a slight correction between April 19 and April 25.
RBI Interventions Limit Indian Rupee Losses Against the Dollar
USDINR was in a general downtrend on the daily chart between early December 2023 and Early March 2024, as the Indian rupee enjoyed a stellar run against the US dollar. Multiple interventions by the Reserve Bank of India (RBI) helped keep the rupee stable during a period when the dollar generally gained against major currencies. That said, the Fed’s monetary policy is expected to retain high-interest rates through the first half of 2024 as it pursues its target 2% inflation rate. This will continue exerting downward pressure against the rupee.
Since the start of the year, the US Federal Reserve and the Reserve Bank of India (RBI) have both remained hawkish. The Fed’s 5.25-5.50% interest rate is likely to carry into the second half of the year, as inflation remains stubbornly above the 2% target. On the other hand, in its April 2024 meeting, RBI maintained interest rates at 6.5%, helping provide support for the rupee. Furthermore, India’s economy has been printing out strong growth figures, making a strong case for the RBI to retain the current rates for longer. On the other hand, the US GDP grew at a slower rate than expected in the first quarter of 2024, putting pressure on the Fed to consider cuts to mitigate adverse effects on the economy.
The downside to RBI intervention
The Reserve Bank of India typically intervenes whenever the USD/INR pair rises above the 83.3 level. This helped keep the exchange rate within a very tight range since the start of 2023. However, the rising strength of the US dollar has generated strong tailwinds for the pair, and the RBI interventions seem to be running out of steam. A failure of the RBI intervention could trigger speculative FX trading, which could weaken the rupee further.
USD/INR Historical Chart
USD to INR trading dates back to 1973 when the pair was floated in the forex market at an opening price of $1 to 7.98 rupees. By late 1983, the currency pair rose past the psychological level of 10 rupees to the US Dollar. Between then and April 2002, it rallied by 376.41% to 48.76 rupees.
After retracing to 39.9 rupees in November 2007, the USD/INR has been on an uptrend since then. The pair surged to an all-time high of 83.47 on November 10th, 2023. Before attaining its all-time highs, the USD/INR tasted the 76.45 price mark in March 2020, just as the coronavirus pandemic was sweeping through the world.
As the US Federal Reserve started to hike rates, Indian Rupee started to slide against the US Dollar. In October 2022, the pair surged to a new all-time high of 83.28. This ATH was refreshed in 2023. However, the dollar’s rally in 2024 saw it hit a new ATH on March 22.
USD/INR Outlook Amid Elevated Oil Prices
Dollar-denominated crude oil has recorded high prices in 2024, defying the previous low demand forecasts. The trend is likely to continue, with China recording better-than-expected economic data, which could increase the demand. However, an even greater concern for India lies in the new trajectory the Russia-Ukraine war has taken. Ukraine recently renewed its attacks on Russian oil infrastructure, and this will likely impact India’s oil import bill.
India has been importing cheap Russian oil amidst the was, reducing pressure on the rupee. Russia was India’s largest supplier of crude oil in 2023, accounting for 30% of its imports. This contributed substantially to the reduction of India’s oil import bill by 24% year-on-year in December 2023. However, India reported a decline in Russian oil imports in January and February, as stricter Western sanctions weighed in. Therefore, we are likely to see this reflected in the strengthening of the dollar against the rupee if the trend continues.
Furthermore, oil prices are likely to rise further after China reported better-than-expected GDP figures for the first quarter of 2024. According to the official government report released on April 15th, the world’s second-largest economy grew by 5.3% YoY, beating the forecast figure of 4.8%. This has renewed confidence that the demand for crude oil could be higher-than-expected in 2024, which could drive up prices. For India, however, this means a higher import bill and more dollar outflows. Conversely, a decline in oil prices could help strengthen the rupee.
USD/INR Forecast 2024
As of this writing, USDINR is on the upward trajectory. However, the pair recently faced rejection at 83.75, and therefore the upside will likely face resistance at the psychological mark of 83.80 in the mid-term. If the pair gains strength above this crucial level, the USD/INR forecast will become very bullish. However, in that case, the Reserve Bank of India may start to intervene again. Keep your eye on 83.00 pivot in the near term. The pivot mark is likely to be at 83.29, with a swing below that level signaling that the sellers are in control, and vice versa. Furthermore, the 82.83 mark is the critical support for the year, and a breach of that level could signal bearishness.
Also, the US interest rate policy will play a crucial role in determining the USDINR exchange rate. If the first interest rate cut comes after June, then we are likely to see fewer cuts in 2024, translating to a stronger US dollar.
What will be USD to INR Rate in 2025?
Long Forecast’s USD to INR forecast 2025 suggests the start of the year around 79.79 Rupees. It expects the currency pair to average 80 Rupees by mid-year before rallying further to 86.97 Rupees by the end of the year. The prices can go much higher if the global economy enters a prolonged recession after the ongoing deflationary measures.
It is important to note that the targets for September 2025 have already been met, while the price pattern on the daily chart indicates that there is a high potential for the October 2025 price target of 83.95 to be met in the second half of 2024. As it is, this makes the USD to INR forecast 2025 above quite viable, albeit with some minor differentials. It is crucial to conduct your own individual research.
USD to INR Forecast 2030
A feasible USD to INR forecast for 2030 is informed by the economic health of India and the US, Fed and RBI’s monetary policy, and the demand for the US dollar as a safe haven. Hence, a strong dollar will likely push USD to INR to a new record high, depending on the key drivers.
However, as an emerging market, India’s currency has the potential to strengthen further in the coming years. From that perspective, USD to INR forecast 2030 will be for the pair to remain within a range for several years.
How to trade USDINR
To trade USDINR, one needs to open an account with a reputable forex broker. When researching the best broker, it is helpful to consider their spreads, commissions, and other fees. It is also possible to trade the currency’s derivatives in the form of USDINR futures.