Rupee Slips as Market Eyes US PMI and Kashmir Tensions by Amit Gupta, Kedia Advisory
The Indian Rupee (INR) traded weaker against the US Dollar (USD) driven by geopolitical tensions in Kashmir and renewed demand for the USD. Despite upbeat April PMI figures, the INR was weighed down by a deadly terror attack near Pahalgam and rising global crude oil prices. Traders await the US S&P Global PMI data, which could further influence the USD. Meanwhile, robust foreign fund inflows and strong economic indicators may limit INR losses. Technical indicators reveal a bearish USD/INR bias below the 100-day EMA, with downside support seen near 84.90. Market sentiment remains cautious amid global trade uncertainty and Fed rate expectations.
Key Highlights
* Rupee weakens as markets react to Kashmir terror attack.
* April PMI data shows strong manufacturing and services growth.
* USD demand rises ahead of S&P Global PMI release.
* Fed officials suggest holding rates steady amid inflation risk.
The Indian Rupee (INR) traded on a softer note against the US Dollar (USD) amid heightened risk aversion, sparked by a terrorist attack in Jammu and Kashmir that killed 28 tourists, prompting Prime Minister Modi to cut short his Saudi Arabia visit. This geopolitical shock weighed on investor sentiment and exerted pressure on the local currency.
Adding to the INR’s weakness was renewed strength in the USD, supported by expectations around the upcoming US S&P Global PMI release. Traders are positioning ahead of the data that could influence the Federal Reserve’s monetary stance. Although money markets still expect around 91 bps in rate cuts by end-2025, Fed Governor Adriana Kugler emphasized caution, signaling the need to hold rates amid rising tariffs and inflation pressures.
Despite the macro headwinds, the Indian economy offered signs of resilience. April’s HSBC Manufacturing PMI rose to 58.4 from 58.1, while the Services PMI increased to 59.1, signaling robust growth across sectors. Foreign portfolio inflows also continue to support the INR, and Mumbai’s leadership in real estate equity investments with $6.9 billion over 2022–24 further underscores investor confidence.
Technically, USD/INR remains in a broader downtrend, trading below the 100-day EMA. Key support lies in the 85.00 region, with a breach possibly pushing prices to 84.50 or even 84.22. On the upside, resistance stands at 85.85 and 86.45.
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