The Indian rupee dipped yet again today as it opened at 90.03 against the US Dollar, down 0.17% from yesterday’s close. The currency continues to breach the psychologically crucial 90-level mark following trade tensions between US and India, dollar demand from importers and the outcome of the US Federal Reserve meeting.
Markets await for a final decision on a trade deal with the US which is currently underway. Further, US trade representative Jamieson Greer said that India has made “the best we’ve ever received as a country”, indicating that the ongoing discussions are heading in a positive direction.
Optimism around US-India trade deal to support rupee
The optimism around the trade deal is expected to provide some relief to Indian currency. Additionally, markets await a rate cut by the US Federal Reserve which is expected to provide some cushion to the depreciating currency. A quarter point rate cut by the US Federal Reserve will likely weaken the US dollar and help increase demand for other currencies including the Indian rupee.
Outlook for Rupee
On Thursday the local currency saw a slight recovery as it closed at 89.87, taking a pause from breaching the psychologically crucial 90-level-mark. With strong GDP numbers and benign inflation numbers the Indian currency is expected to make a recovery by early 2026. Analysts expect the currency to hover between the 89.5-90.5 levels for the recent trading sessions.
Analysts have said a lack of trade deal between India and US can severely hamper the rupee, bringing it down to the 92-mark-level against the US Dollar. RBI is unlikely to intervene with the currency depreciation as in its MPC meeting RBI Governor Sanjay Malhotra said that the market forces will naturally determine the currency’s value.