USD/INR opens flat ahead of fifth voting on US short-term funding bill

• The Indian Rupee flattens against the US Dollar around 88.90, with investors remaining cautious on US-India trade tensions.
• FIIs continue to pare stakes in the Indian stock market.
• The US Senate is set to vote on the stopgap bill for the fifth time.

The Indian Rupee (INR) opens on a flat note around 88.90 against the US Dollar (USD) on Monday. The USD/INR pair is broadly firm as it is still close to its all-time high of 89.12 posted on September 24.

Financial market participants remain uncertain over the Indian Rupee's outlook amid trade tensions between the United States (US) and India for a few months. Exports from the Indian economy to the US are facing 50% tariffs, almost the highest among Washington's trading partners, due to India buying Oil from Russia.

Over the weekend, External Affairs Minister Subrahmanyam Jaishankar said in a speech at Kautilya Economic Conclave (KEC) 2025 that both nations are struggling to reach a consensus, being unable to arrive at common ground. However, Jaishankar didn't clarify the reasons that have refrained both nations from reaching a trade agreement.

"We have issues with the US and a big part of it because we have not arrived at a landing ground; the inability to reach there has led to tariffs being levied," Jaishankar said, Moneycontrol.com reported.

However, Minister Jaishankar clarified that the US should respect red lines drawn by India. In the past, both nations have been unable to reach a deal as Washington wants New Delhi to open its agriculture and defense markets for US companies.

Trade tensions between the US and India have remained a major drag on the sentiment of overseas investors towards the Indian stock market. In the July-September period, Foreign Institutional Investors (FIIs) have sold equity shares worth Rs. 1,29,870.96 crores in the Indian stock market. FIIs also remained sellers in the pass two trading days of October and sold shares worth Rs. 3,188.57 crores.

The Fed is expected to cut interest rates further by 50 bps before the end of the year

• The Indian Rupee flattens against the US Dollar during opening hours on Monday, even as the Greenback trades positively. At the time of writing, the US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, trades 0.35% higher to near 98.00.
• The USD Index rises even as Washington is facing the risk of mass lay-offs in the wake of the government shutdown. Washington went into the darkness last week after the stopgap bill proposed by Republicans failed to get the required votes in the US Senate. Democrats didn't support the short-term funding bill amid a clash over increasing healthcare benefits under the Affordable Care Act.
• On Sunday, US President Donald Trump told reporters, "It's taking place right now," after he was asked when the White House would begin lay-offs, Reuters reported.
• The impact of a partial government shutdown would be significant on the economy and would intensify speculation of more interest rate cuts by the Federal Reserve (Fed) in the remainder of the year.
• According to the CME FedWatch tool, there is an 84% chance that the Fed will reduce interest rates by 25 basis points (bps) in each of its two policy meetings remaining this year.
• Meanwhile, both Republicans and Democrats are set to meet again on Monday to vote on the stopgap funding bill for the fifth time. The comments from members of the Democratic Party suggest that the stopgap bill is unlikely to be passed again.
• They've refused to talk with us," Senate Democratic leader Chuck Schumer told CBS's "Face the Nation" program, adding that it could be solved only by further talks, Reuters reported. Meanwhile, White House National Economic Council Director Kevin Hassett told CNN that he still sees a chance of Democrats supporting the bill.

Technical Analysis: USD/INR wobbles around 88.90

USD/INR starts the week on a flat note around 88.90. The near-term trend of the pair remains bullish as the 20-day Exponential Moving Average (EMA) slopes higher around 88.60.

The 14-day Relative Strength Index (RSI) stays above 60.00, suggesting a strong bullish momentum.

Looking down, the pair could slide to near the September 12 high of 88.57 and the 20-day EMA, if it breaks below the September 25 low of 88.76.

On the upside, the pair could extend the rally towards the round figure of 90.00 if it breaks above the current all-time high of 89.12.