23/02/26

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The Indian Rupee opened slightly higher against the US Dollar at the beginning of the week, trading near 90.86. The appreciation was primarily influenced by a decline in the US Dollar, which has come under pressure following a significant ruling by the U.S. Supreme Court.

Last Friday, the court invalidated President Donald Trump’s tariffs, ruling that he exceeded his constitutional authority by using the International Emergency Economic Powers Act to impose sweeping tariffs on trading partners. This decision has cast doubt on the credibility of U.S. trade policies and triggered asset re-pricing globally. Reacting to the ruling, Trump indicated an intention to maintain trade tensions, having announced a 15% global tariff rate that was set to offset previous duties.

The impact of the court’s decision, combined with weaker economic data, has led to a softer dollar. The US Dollar Index, which measures the USD against a basket of six major currencies, declined approximately 0.35% to near 97.45. Contributing to the dollar’s weakness were disappointing economic indicators: Q4 Gross Domestic Product expanded at an annualized rate of just 1.4%, substantially below forecasts of 3% and well down from the previous quarter’s growth of 4.4%. Additionally, the S&P Global Purchasing Managers’ Index for February registered at 52.3, slightly lower than January’s 53.0, reflecting modest growth in manufacturing and services sectors.

In contrast, these developments have created a more favorable environment for Indian exports. The Supreme Court’s ruling effectively curtails expected tariffs imposed by the U.S., which had been set at 18%, thereby enhancing India’s competitive positioning in the global market. Despite this, the anticipated U.S.-India trade negotiations have faced delays, with plans for Indian trade delegations to visit the U.S. postponed indefinitely.

Investor sentiment remains cautious, as Foreign Institutional Investors have continued to exit Indian equities, offloading over Rs. 2,000 crore in February alone, including a net sale of Rs. 934 crore on Friday. This ongoing foreign selloff raises concerns about the Rupee’s outlook despite positive trade developments.

From a technical perspective, the USD/INR pair is testing key support levels, holding just above the 20-day exponential moving average at approximately 90.88. The recent flattening of this moving average suggests consolidation. The RSI remains in a neutral range between 40 and 60, indicating a sideways trend, while the 20-day EMA currently acts as an immediate pivot, maintaining a mildly bullish bias unless momentum shifts significantly.