USD/INR attracts some sellers after Trump says new China trade deal possible

• The Indian Rupee edges higher in Thursday’s early European session. 
• Trump said new China trade deal ‘possible’ despite tensions.
• Persistent outflows from Indian stocks could weigh on the INR. 

The Indian Rupee (INR) recovers on Thursday, tracking a rise in most of its Asian peers, including Chinese Yuan. US President Donald Trump said it would be possible to reach a fresh trade deal with China, signaling he is open to heading off a brewing trade fight between the United States and China. Furthermore, the potential US Dollar (USD) selling intervention by the Reserve Bank of India (RBI) and a decline in crude oil prices might help limit the INR’s losses.

Nonetheless, Foreign Portfolio Investment (FPI) outflows could exert some selling pressure on the local currency. FPIs sold more than $10 billion worth of Indian equities in the first six weeks of 2025, the largest outflow ever recorded during this time. This enormous selloff has resulted in the worst start for domestic markets in over a decade.