The Indian rupee's struggle against a backdrop of global risk aversion and trade tensions is a gripping tale of economic resilience. But will it hold its ground?
On October 14, 2025, the rupee hovered dangerously close to its all-time low against the U.S. dollar, closing at 88.7975, just a whisker away from the record low of 88.80. This came amid a broader context of waning risk appetite, as U.S.-China trade relations heated up again, causing ripples across global markets.
Here's where the plot thickens: Despite the gloomy outlook, the Reserve Bank of India (RBI) seemingly stepped in to prevent the rupee from plunging further. Traders noted state-run banks' persistent dollar sales, a pattern mirroring recent RBI interventions. A private bank was also observed offering dollars near the critical 88.80 mark, while foreign banks dominated the bids, according to an FX trader.
The rupee's story is intertwined with broader market trends. Asian currencies, such as the Korean won and Thai baht, also weakened, while global equities dipped into the red. India's Nifty 50 outperformed its Asian peers, but the overall sentiment was cautious.
And this is the part most analysts are watching: The rupee's woes are compounded by steep U.S. tariffs, stringent immigration policies, and the surge in precious metal prices. Yet, there's a glimmer of hope. Analysts from ING predict that India's eventual success in securing lower tariff rates could boost the rupee in the medium term. However, HSBC analysts, while optimistic about a recovery post U.S.-India trade negotiations, have tempered their year-end forecast due to ongoing uncertainties.
So, will the rupee weather this storm? The answer lies in the delicate balance between global trade dynamics and India's economic resilience. What's your take on this economic conundrum?
