India Rupee Review
At record closing low on FX outflows after US tariff news
This story was originally published at 17:13 IST on 31 July 2025
Register to read our real-time news.Informist, Thursday, Jul. 31, 2025
By Gowri Lakshmi
MUMBAI – The rupee settled at a record closing low against the dollar Thursday as investors rushed to withdraw funds from domestic financial markets after US President Donald Trump announced 25% tariff on India, starting Friday, dealers said. Despite aggressive intervention by the Reserve Bank of India, the rupee slumped owing to persistent dollar purchases by overseas investors and importers, dealers said.
"RBI would have sold a good chunk to bring it down by some 20 paise, but the demand was just too much. Moreover, it's a month-end just ahead of the tariff. We anyways expected rupee to even breach 88 (a dollar)," a dealer at a private sector bank said. Dealers estimate the central bank to have sold around $800 million-$1 billion to prevent the rupee from inching toward the psychologically crucial 88-per-dollar mark and curb excessive market volatility.
After hitting a near six-month low of 87.7425 a dollar, the Indian unit settled at 87.5950 against the greenback, sharply lower than the previous close of 87.4200 on Wednesday. The domestic currency moved in a range of over 24 paise during the day.
At open, the rupee plunged to 87.6900 a dollar and was soon dragged to a six-month low as banks purchased dollars on behalf of overseas investors, who were rattled after Trump announced the tariff. On Wednesday, the US president posted on his social media handle Truth Social that India would face 25% tariff and a penalty for purchases of significant energy purchases from Russia. He also said the additional penalty was also due to India being a member state in BRICS (group of nations).
"It's also BRICS, which is basically a group of countries that anti US and India is a member of that. It is partially BRICS and it is partially the trade situation," Trump said, reiterating his earlier threat of 10% tariff on BRICS member states. However, investors also weighed the ongoing US-India trade deal talks, as Trump said New Delhi is in talks with Washington and is willing to cut tariffs "very substantially."
Market participants are now bracing for the impact of the reciprocal tariffs, which will come into effect Friday. A delegation of US officials is expected to visit New Delhi in late August for the next round of bilateral talks. The Indian government has said it will take all necessary measures to strike a deal with the US which will secure its national interests.
A few dealers speculated that the RBI sold dollars in the non-deliverable forwards market to prevent the rupee from falling to a lifetime low at open. Shortly after the tariff announcement Wednesday, the domestic currency fell to 87.75 a dollar in the offshore NDF market and traded around similar levels before the domestic spot market opened Thursday.
The central bank actively began selling dollars at the day's low, dealers said. A few banks also sold dollars on behalf of overseas investors, who wanted to invest in the public offerings of domestic companies, dealers said. Even though the inflows helped the rupee pare some losses, they weren't significant enough for the rupee to strengthen, dealers said.
"IPO last day is tomorrow (Friday), most likely more flows will come tomorrow. Today's flows can be called 'negligible' compared to the dollar demand we have," another dealer at another private sector bank said. The IPO of National Securities Depository Ltd. opened for subscription Wednesday and will close Friday.
The rupee came under further pressure as importers also rushed to purchase dollars, fearing further fall of the rupee, dealers said. Noting the slump in the Indian unit, a few exporters sold dollars, which provided a cushion for the rupee, dealers said. However, most exporters remained on the sidelines, anticipating the rupee to inch towards the 88-a-dollar mark in the coming days, dealers said.
The dollar index strengthened and hit an over two-month high of 99.98 Wednesday as the odds of an interest rate cut by the US Federal Reserve diminished after the FOMC's July policy outcome. The US Federal Open Market Committee held the federal funds rate target range steady at 4.25-4.50%, as widely expected, for the fifth consecutive meeting. US Federal Reserve Chair Jerome Powell said the Fed was focussed on controlling inflation and that tariffs and government borrowing put pressure on prices, making it difficult for the central bank to begin easing its "modestly restrictive" policy stance.
According to the CME FedWatch tool, traders now see only a 43.2% chance of a 25-basis-point rate cut by the Fed in September, as opposed to 58.4% a week ago and 75.4% a month ago. At 1530 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 99.77, broadly steady against 99.89 on Wednesday and up from 98.90 on Tuesday.
| AT 1530 IST | AT 0900 IST | HIGH | LOW | PREVIOUS(AT 1530 IST) | |
| Spot rupee per $1 | 87.5950 | 87.6900 | 87.5050 | 87.7425 | 87.4200 |
| 1-year dlr/rupee fwd (paise) | 171.55 | 175.16 | 175.16 | 171.55 | 176.31 |
FORWARDS
The one-year dollar/rupee forward premium fell to a near two-week low Thursday. US Federal Reserve Chair Jerome Powell's comments after the FOMC's policy outcome late Wednesday reduced the odds of an interest rate cut in September, dealers said. With the Fed unlikely to go for a rate cut in September, and no sight of a rate cut by the Reserve Bank of India for the rest of the year, the interest rate differential between the US and India may not widen as much as expected earlier, dealers said.
The yield on the 10-year benchmark US Treasury note inched up 4 bps to 4.38% due to easing odds of a September rate cut, weighing on premiums. Forwards of a currency pair are reflective of the interest rate differential between the two countries.
Noting the slump in the rupee against the dollar in the domestic spot market, exporters sold dollars for forward delivery, which further pulled premium levels down, dealers said. The one-year exact period dollar/rupee forward premium ended at 1.97%, lower than Wednesday's close of 2.02%. On an absolute basis, the premium was at 171.55 paise, against 176.31 paise Wednesday.
OUTLOOK
Market participants will keenly watch out for any tariff-related news as the reciprocal tariffs will come into effect Friday. The rupee is likely to take cues from the movement in the dollar index and offshore Chinese yuan, dealers said. The rupee may also take cues from the movement in crude oil prices amid heightened geopolitical tensions between the US and Russia, dealers said.
Dealers expect foreign investors to continue to withdraw funds from domestic markets, which may put the rupee under pressure, dealers said. They also expect importers to buy dollars, wary of a sharp decline of the domestic unit, dealers said. However, they also expect the central bank to remain active in the market through dollar sales, to limit the fall of the rupee and curb any excessive market volatility. They also expect foreign fund inflows and exporters' dollar sales to support the rupee.
During the day, the rupee is seen moving in a range of 87.30 to 87.80 against the greenback. Dealers peg key technical support for the Indian unit at 87.80 a dollar.
India Rupee: 1-yr fwd premium at 2-wk low on fading US rate cut expectations
| AT 1425 IST | AT 0900 IST | HIGH | LOW | PREVIOUS(AT 1530 IST) | |
| Spot rupee per $1 | 87.5925 | 87.6900 | 87.5050 | 87.7425 | 87.4200 |
| 1-year dlr/rupee fwd (paise) | 172.63 | 175.16 | 175.16 | 172.63 | 176.31 |
MUMBAI – The one-year dollar/rupee forward premium fell to a near two-week low Thursday. US Federal Reserve Chair Jerome Powell's comments after the Federal Open Market Committee's policy outcome late Wednesday reduced the odds of an interest rate cut in September, dealers said.
The US FOMC held the federal funds rate target range steady at 4.25-4.50%, as widely expected. Powell said the Fed was focussed on controlling inflation and that the tariff(s) and government borrowing put pressure on rising prices, making it difficult for the central bank to begin easing its "modestly restrictive" policy stance.
"You have to think of this as still quite early days," Powell said, adding that the central bank was in the early stages of understanding how tariffs and other policy changes would impact inflation, jobs and economic growth. According to the CME FedWatch tool, traders now see only a 43.2% chance of a 25-basis-point rate cut in September, as opposed to 58.4% a week ago and 75.4% a month ago. With the Fed unlikely to go for a rate cut in September, and no sight of a rate cut by the Reserve Bank of India for the rest of the year, the interest rate differential between the US and India may not widen as much as expected earlier, dealers said.
The yield on the 10-year benchmark US Treasury note inched up 4 bps to 4.38% due to easing odds of a September rate cut, weighing on premiums. Forwards of a currency pair are reflective of the interest rate differential between the two countries.
Further, noting the slump in the rupee against the dollar in the domestic spot market, exporters sold dollars for forward delivery, which further pulled premium levels down, dealers said. "There is good amount of receiving happening now, especially since spot has fallen and importers are practically inactive, as they expect forward levels to go down further in the coming days," a dealer at a private sector bank said. The rupee hit a near six-month low of 87.7425 against the greenback earlier in the day, its lowest since Feb. 10, when the Indian currency hit its record low of 87.9500 a dollar.
At 1425 IST, the one-year exact period dollar/rupee forward premium was 1.97%, down from Wednesday's close of 2.02%. On an absolute basis, the premium was at 172.63 paise, against 176.31 paise Wednesday. (Gowri Lakshmi)
India Rupee: Remains sharply dn on foreign fund outflows, importers' dlr buys
| AT 1320 IST | AT 0900 IST | HIGH | LOW | PREVIOUS(AT 1530 IST) | |
| Spot rupee per $1 | 87.6250 | 87.6900 | 87.5050 | 87.7425 | 87.4200 |
MUMBAI – The rupee remained sharply down against the dollar Thursday as a risk-averse sentiment of investors was triggered after the US announced 25% tariff on India, dealers said. Importers also purchased dollars, fearing a further slump in the rupee, dealers said. However, an aggressive-than-usual intervention by the Reserve Bank of India and foreign fund inflows, likely relating to the initial public offerings of domestic companies, limited the fall in the rupee.
"RBI has intervened significantly from morning. It has erased losses and even reached 50 (87.50). Some flows are there but it was RBI who bought the levels back today (Thursday)," a dealer at a private-sector bank said.
The rupee came under pressure as investors assessed the impact of the US tariffs on the Indian economy ahead of tariffs coming into effect Friday, dealers said. US President Donald Trump Wednesday hit India with 25% tariffs, along with a penalty, effective Friday, slightly less than the 26% import duty threatened earlier in April. The tariff rate, however, was higher than expected, dealers said.
Meanwhile, shortly after announcing the tariffs, Trump also said New Delhi is in talks with Washington and a trade deal is in progress, with India willing to reduce tariffs "very substantially." The Indian unit hit a near six-month low of 87.7425 against the greenback in early trade. Noting the slump, a few exporters also sold dollars, to take advantage of the lucrative dollar/rupee levels, dealers said. However, they said most exporters remained on the sidelines as they anticipate the rupee to fall further in the coming days.
The dollar index strengthened Wednesday and remained broadly steady, which also weighed on the rupee, dealers said. At 1331 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 99.72 against 99.89 Wednesday and 98.90 Tuesday.
The rupee was supported by some banks' dollar sales, likely for initial public offering-related flows on behalf of overseas investors, dealers said. The IPO of National Securities Depository Ltd. had opened for subscription Wednesday and will close Friday.
For the rest of the day, the rupee is seen moving in a range of 87.50-87.80 a dollar. Dealers peg the key technical support for the Indian unit at 87.80 against the greenback. (Gowri Lakshmi)
India Rupee: Technical levels for rupee - Jul 31
MUMBAI – At 1156 IST, the rupee was at 87.5450 per dollar. At 0900 IST, the rupee was at 87.6900 a dollar, against the previous close of 87.4200. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages:
| Participants | S2 | S1 | R1 | R2 |
| Private-sector bank | 87.90 | 87.70 | 87.55 | 87.50 |
| Brokerage firm | 87.95 | 87.86 | 87.45 | 87.35 |
| Brokerage firm | 88.00 | 87.97 | 87.68 | 87.50 |
(Gowri Lakshmi)
India Rupee - Asia FX: Most fall as dollar rises after FOMC leaves rate unch
MUMBAI – Most Asian currencies fell against the dollar due to a rise in the dollar index. The dollar index, which measures the strength of the greenback against a basket of six major currencies, rose Wednesday after US Federal Open Market Committee kept the federal funds target rate range unchanged. Stronger-than-expected US economic data also supported the greenback.
However, the rise of the dollar index was capped as the Japanese yen, which carries a weightage of 13.6% in the index, rose after the Bank of Japan raised its inflation forecast, while keeping the benchmark rate unchanged. The yen was up 0.4% against the US dollar. The dollar index was 99.77 at 1005 IST, against 99.89 Wednesday and 98.90 Tuesday.
The US FOMC kept the benchmark rate unchanged at 4.25-4.50%. The committee noted unemployment rate remains low and labour market conditions remain solid. "Inflation remains somewhat elevated," the statement said. "The Committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run," the FOMC said. "Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate." The odds of a 25-basis-points rate cut in September fell to 43.2% from 63.3% Tuesday.
Data released Wednesday showed US GDP grew at 3.0% on year in the June quarter, more than 2.4% expected in a Reuters poll. US consumer spending, accounting for more than two-thirds of the economic activity, rose in Apr-Jun from the March quarter.
Another set of data released Wednesday showed private payrolls in the US rose more than expected in July. The ADP National Employment report showed private payrolls increased by 104,000 in July, much higher than the forecast of 75,000 increase in a Reuters poll. It also followed a revised decline of 23,000 in June.
The Taiwan dollar fell 0.8% against the US currency. The South Korean won was down 0.1% against the dollar as market participants assessed the trade deal with the US, in which South Korean exports to the US will invite a 15% tariff. The Philippines peso fell 1.3% against the dollar due to a strong dollar. The Indonesian rupiah was down 0.4%, and the Malaysian ringgit was down 0.3% against the greenback.
However, the Thai baht was slightly up against the dollar. On Wednesday, Thailand's finance ministry said the economy was set to grow 2.2% this year, higher than their previous forecast of 2.1% growth. (Sourabh Kumar)
India Rupee: Sharply down on FX outflows; RBI intervention limits fall
| AT 0914 IST | AT 0900 IST | HIGH | LOW | PREVIOUS(AT 1530 IST) | |
| Spot rupee per $1 | 87.6850 | 87.6900 | 87.6500 | 87.7425 | 87.4200 |
MUMBAI – The rupee slumped against the dollar and hit a near six-month low in early trade owing to foreign fund outflows after the US imposed 25% tariff on India, dealers said. However, relatively aggresive dollar sales by the Reserve Bank of India and likely inflows relating to initial public offerings of domestic companies limited the fall of the rupee, dealers said. The Indian unit hit a low of 87.7425 a dollar, its lowest level since Feb. 10.
"RBI is actively and slightly agressively selling," a dealer at a private sector bank said. "They have brought it down to 61 (87.61 a dollar) and they will guard this for sometime, though there isn't any ideal rupee/dollar level." Dealers said the central bank sold dollrs in the offshore non-deliverable forwards market and sold the greenback at around 87.74 a dollar in the domestic spot market.
The rupee came under pressure as banks purchased dollars on behalf of foreign portfolio investors, who withdrew funds and moved to other safe-haven assets after US President Donald Trump announced 25% tariff on India. Trump also said in a post on his Truth Social that India would also pay additional penalty for significant purchases of energy from Russia and later cited that Indian being part of the BRICS (group of nations) as the reason.
However, shortly after announcing the tariff rate on India, Trump Wednesday said New Delhi and Washington were in talks for a trade deal and as part of the deal, India was willing to cut tariffs "very substantially". At 0949 IST, the benchmark stock indices – the Nifty 50 and the BSE Sensex – were down 0.7% down each.
A rise in the dollar index after the US Federal Open Market Committee meeting's policy outcome also weighed on the rupee. The FOMC held the federal funds rate target range steady at 4.25-4.50%, as widely expected, for the fifth consecutive meeting. At 0950 IST, the dollar index, which measures the strength of the dollar against a basket of six major currencies, was at 99.77, broadly steady against 99.89 on Wednesday and up from 98.90 on Tuesday. The index hit an over two-month high of 99.98 on Wednesday.
However, the rupee got some support from likely foreign fund inflows, possibly relating to the IPO of National Securities Depository Ltd., which opened for subscription Wednesday and will close Friday.
During the day, the rupee is seen moving in a range of 87.50 and 87.90 a dollar. Dealers peg key technical support for the rupee at 87.80 against the greenback. (Gowri Lakshmi)
India Rupee: Expected range for rupee - Jul 31
MUMBAI – Following are the expected support and resistance levels for the rupee on Thursday, as forecast by leading banks and brokerages in an Informist poll:
| PARTICIPANT | SUPPORT | RESISTANCE |
| Public-sector bank | 87.85 | 87.55 |
| Private-sector bank | 87.90 | 87.55 |
| Foreign bank | 88.20 | 87.95 |
| Brokerage firm | 88.11 | 87.51 |
| Brokerage firm | 87.99 | 87.35 |
| Brokerage firm |
87.88 |
87.25 |
(Gowri Lakshmi and Sourabh Kumar)
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Avishek Dutta
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