A rising dollar index, significant new tariffs on Indian exports to the US, and ongoing outflows of foreign currency are all putting more pressure on the Indian rupee, which is now trading between Rs87.55 and Rs87.66 per US dollar. Market data indicates that one US dollar now trades for between Rs87.55 and Rs87.66 onshore, with the Reserve Bank of India (RBI) often intervening to reduce volatility.
From around Rs74 per dollar in mid-2020 to breaking over Rs79 by 2022 due to rising crude and US rate rises, and creeping near Rs83 in 2024 due to concerns about a global recession, the rupee has progressively declined over the last five years. The reduction to the 87-plus threshold this year amounts to a total drop of about 13 percent.
The immediate impact comes from the US dollar’s robust rebound, which is boosting demand for greenbacks and putting pressure on emerging market currencies like the rupee. This recovery is being driven by safe-haven demand and anticipation of more rate reduction from the US Federal Reserve.
This year, foreign investors have withdrew between $4 and $10 billion from Indian debt and stocks, while the RBI has invested over $9 billion in spot and non-deliverable forward (NDF) market operations to protect the rupee.
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