Monday saw the Indian rupee continuing its downward trajectory, driven by corporate hedging and probable equities outflows. At 11:24 am IST, the rupee traded 86.3675 to the US dollar, down from 86.2050 on Friday. On relief in the emerging market currency area over U.S. tariffs following U.S. President Donald Trump’s decision to postpone imposing tariffs on its trading partners, the local currency recovered by 0.5% last week, reaching its highest level in two weeks.
The pullback in USD/INR was “correlated with the dollar softness.” “The Federal Reserve staying neutral and Trump postponing aggressive tariff action are prerequisites for that dollar softness,” he stated.
The rupee did not benefit from Monday’s further drop in Indian stocks. The Nifty 50 Index experienced a 1% decline. So far this month, foreign investors have removed $7.5 billion worth of Indian stocks. A currency trader at a bank stated that gains in the rupee are likely to be brief due to the ongoing equities outflows and corporate client hedging.
The attention will be on Fed Chair Jerome Powell’s press conference, as it is widely anticipated that the Fed will not alter the policy rate this week and that no fresh inflation or rate estimates will be released at this meeting.
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