Weekly Synopsis :

Weekly SYNOPSIS: 30/01/2025

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Currency Map:

Currency Pairs	WEEK  CLOSE	PRIOR WEEK CLOSE	% change
USD/INR	91.89	91.85	–
EUR/INR	109.56	107.62	1.80
GBP/INR	126.28	123.62	2.15
JPY/INR	59.72	57.75	3.41

Brent Crude closed at USD 69 VS previous year close of USD 65. Gold closed at USD 4865. Nifty closed at 25320 vs prior year close of 25048. 10 Year G-SEC Yield is now at 6.69%.

Major developments: USDINR traded in the 91.50-92 range last week, and Rupee declined closed flat against USD w/w. However, Rupee declined 2.22% m/m. EUR climbed 1.80% w/w and GBP climbed 2.15% w/w against Rupee. USDINR fwd premia closed at 2.58% for 1 year.

Indian benchmark Equity indices climbed 1.08% w/w. 10 Year G-SEC Yield closed at 6.69%.

FX reserves stood at USD 709.4 bn, as on Jan 23 rd. Reserves climbed 8 bn w/w.

In Jan 2026 tii date, FII’S have sold Rs 31393 Cr of Indian Equities and sold Rs 7259 cr of debt.

Rupee continues to be under pressure due to maturing NDF contracts and month end demand. FII outflows has touched USD 4 bn in Jan alone.

IIP climbed 7.8% in Dec. Mfrg climbed 8.1%, mining climbed 6.8%, electricity grew by 6.3%.This is the best reading in 2 years. Jan GST collections climbed 6.2% to Rs 1.93 lac Cr.

Increase in Capex to Rs 12.2 kac Cr, tax holiday to data centres and toll mfrg, high speed rail corridors, freight and rare earth corridors, reduction in fiscal deficit to 4.3%, bringing down debt to GDP to 55.6%, lower TCS on overseas tours and education, buy back taxation for non promoter shareholders at Captal gains rate, increase in defense expenditure by 9.2%, development of waterways, MSME support Equity fund of Rs 10000 Cr, increase in PLI scheme for semiconductors and electronic components manufacturing to Rs 40000Cr, development of bio pharma park, 3 dedicated chemical parks, 5 textile parks, focus on sports goods mfrg, new City economic regions, university townships in states, east coast industrial corridors, use of AI to help farming community, reduction in customs duty for personal baggage imports, support to fisheries and marine exports, new framework for corporate bonds, revised portfolio investment schemes for NRI’S. medical tourism hub, focus on self help group for women and stem education facilitation for girls with hostel facilities are highlights of FY 26-27 budget. There is also a formation of high level committee on banking to decide futuristic steps for Indian banking system. New IT act will come into force from April 1 st.

Increase in Gross borrowings to Rs 17.2 lac Cr and increase in STT on equity derivatives were negatives for bank stocks and Equity markets.

India-EU trade deal was signed, linking second and fourth largest economies of the world, representing 25% of Global GDP output and a combined market of 2 bn people. Tariffs will be removed for processed food, pharma products, significant duty cut for Wines, beers and spirits, 10% duty for autos up to 2,50,000 car imports, zero duty for auto parts, lowering of duty on European agri products are some key features. EU will scrap tariffs on 93% of Indian imports. Average EU tariffs on Indian imports will decline from 3.8% to 0.1%. Textiles, Gems, Leather are major beneficiaries. Trade between India and the EU stood at $136.5 billion in the fiscal year through March 2025, compared to $132 billion of trade between India and U.S., and $128 billion between India and China.

Access to services on either side will be opened.

Mobility and defence agreements were also signed.

Important levels to watch are 91.40/91 on the downside and 92/92.50 on the upside.

Hedging advise: Hedging be done according to policy objectives.

Global developments: The week started with another brilliant run by Gold and Silver. USD declined steeply against majors following US President’s comments on USD weakness. He shrugged it off saying that it is fine. This emboldened traders to short USD further. However, market direction was reversed after the appointment of new Fed Chairman.

US President nominated Kevin Marsh as new Fed Chairman. He is considered as hawkish and the choice surprised markets, considering Trump’s own view of lower interest rates. Cross Currencies declined and commodities tanked. Gold plunged 10% and Silver declined 30%, one of the highest volatile days in commodities trading. US Govt shutdown is also lingering. US-Iran tensions and tariff issues will not fade away fast. For the day, markets are calibrating direction of monetary policy under new Chairman, starting from May. The effect was seen in commodities sell off.

Earlier in the week, Federal Reserve held interest rates steady at 3.50%–3.75% as widely expected, marking the first pause after three consecutive cuts. In its policy statement, the Fed cited still-elevated inflation alongside solid economic growth and a stabilizing labor market, and offered little in the way of guidance on the timing of future cuts.

Fed Chairman said that Fed should be insulated from electoral politics and its independence is paramount. Powell emphasized that accountability runs through Congress, describing engagement with lawmakers as an “affirmative regular obligation.” He argued that democratic legitimacy is earned through oversight and transparency, not through alignment with political agendas.

IMF Managing Director Kristalina Georgieva said earlier this week that the Fund is preparing for scenarios involving sharp selloffs in US dollar-denominated assets. While framed as contingency planning, the comments highlights growing institutional awareness of tail risks around the Dollar.

US NFP is the key data event for the week.

Currency technical levels: USDINR: 91.40/91.10 (Supports), 92/92.50 (resistance),

EURINR:108(Support),  (Resistance): 110.30

GBPINR: Supports: 124.70/123.25 (supports), Resistance:125.40.

JPYINR: Resistance:60.30 Supports: 58/58.50 (support).