The Indian rupee is poised to retain its weakening bias on Monday, pressured by broad losses in regional peers, lacklustre foreign equity inflows and persistent dollar demand from local corporates.
The 1-month non-deliverable forward indicated a flat-to-slightly-weaker open on Monday from 86.1475 in the previous session. The rupee has slipped near to 1 per cent in the last two weeks and now hovers near its lowest level in almost a month.
With the dollar/rupee pair “having clipped past 86, it looks like we’re in a slow push higher,” said a currency trader at a Mumbai-based bank.
“Right now, I don’t see anything that could meaningfully turn the rupee around. The US-India trade deal is one factor, though expectations of India making a relatively favourable one are fading.”
Bankers said importers have been actively buying dollars for payments and short-term hedging, while foreign portfolio investor flows have remained muted. Offshore investors have pulled out more than $600 million from Indian equities so far this month, after pumping in nearly $4 billion during May and June.
Market participants are keeping an eye on headlines around the US-India trade deal, though most reckon it’s unlikely to offer much support to the rupee.
The pause in the dollar’s downtrend is adding to the pressure on the rupee. The dollar index climbed 0.6 per cent last week, extending its nearly 1 per cent rally from the previous week.
The dollar index was hovering near 98.50 on Monday, while Asian currencies were mostly weaker. Market focus remains on US President Donald Trump’s tariff announcements ahead of the August 1 deadline.
Other key events this week include the European Central Bank’s rate decision and China–European Union summit.
“A wait-and-see approach remains the most probable course of action for the ECB next week. With the next potential tariff escalation not expected until August 1, there’s little reason for a pre-emptive rate cut now,” ING Bank said in a note.
Published on July 21, 2025
