USD vs INR 2025: Why is Indian Rupee Falling Despite Dropping US Dollar Rates?

USD vs INR 2025: Why is Indian Rupee Falling Despite Dropping US Dollar Rates? Despite a weakening US dollar, the Indian rupee has remained range-bound and has not capitalized on favorable global conditions. While the US dollar index has fallen to around 101 from a three-month high of 106, reflecting a significant drop, the rupee has continued to trade within a narrow range. This scenario is surprising given the broader trend of appreciation among many Asian currencies and the positive macroeconomic indicators such as declining crude oil prices and strong foreign institutional inflows (FII) into Indian equities.

USD vs INR 2025

Experts attribute the Indian rupee’s lack of appreciation to substantial intervention by the Reserve Bank of India (RBI), which has been actively buying dollars to stabilize the currency. Additionally, the RBI’s strategy appears to be influenced by India’s high trade deficit with China and the performance of the Chinese yuan against the dollar. This has kept the rupee within a constrained range, despite other supportive factors that could have pushed it higher.

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USD vs INR Recent Currency Trends

Metric Value
US Dollar Index 101 (from a high of 106)
Indian Rupee Range 83.80 to 84.05
Recent High (USD/INR) 84.00
Recent Low (USD/INR) 83.80

Performance of Asian Currencies

Currency Recent Trend
Japanese Yen Strengthened against USD
Chinese Yuan Appreciated against USD
Korean Won Gained against USD
Thai Baht Strengthened against USD

Key Influences on the Rupee

Influence Description
RBI Intervention Active buying of USD by RBI
Trade Deficit with China High trade deficit impacting rupee stability
Crude Oil Prices Decline in oil prices supports the rupee
Foreign Institutional Inflows Strong inflows into Indian equities

RBI’s Currency Management

Action Description
Dollar Purchases RBI buying dollars to stabilize the rupee
Currency Band Control Maintaining rupee within a specific range
Impact on Exchange Rates Preventing sharp appreciation or depreciation

Recent Economic Data

Data Description
US Dollar Index Recent drop to 101
Crude Oil Prices Declined, benefiting the rupee
FII Inflows Strong inflows into Indian markets
Trade Deficit High deficit with China

Analyst Views

Analyst Opinion INR/USD Range
Amit Pabari, CR Forex Advisors RBI’s intervention preventing rupee appreciation 83.80 to 84.05
Jigar Trivedi, Reliance Securities Rupee likely to remain range-bound 83.80 to 84.00

Impact of US Fed Rate Expectations

Metric Description
US Fed Rate Cut Bets Increased expectations for rate cuts
Dollar Impact Expected weakening of the USD
INR Response Rupee not significantly strengthening

Foreign Institutional Investment

Investment Type Description
Equity Inflows Significant FII inflows into Indian stocks
Impact on Rupee Should typically strengthen the rupee, but not observed

Crude Oil Price Trends

Trend Description
Recent Decline Oil prices have fallen
Impact on Rupee Positive impact expected

USD vs INR Technical Analysis

Analysis Description
Current Range 83.80 to 84.05
Resistance Level 84.00
Support Level 83.80

RBI’s Strategy Justification

Justification Description
High Trade Deficit Avoiding exacerbation of trade deficit impacts
Yuan Appreciation Managing rupee depreciation against the yuan

Market Reactions

Reaction Description
Range-Bound Trading Rupee staying within a narrow range
Limited Currency Movement Lack of significant appreciation

Forecast and Predictions

Forecast Description
Short-Term Expected to remain within current range
Medium-Term Slight broadening of the range expected

Factors Preventing Rupee Appreciation

Factor Description
RBI Intervention Continuous buying of USD
Trade and Economic Conditions High trade deficit with China and other factors

Future Outlook

Outlook Description
Near-Term Range-bound between 83.80 and 84.05
Medium-Term Possible slight range broadening

USD vs INR Summary

Despite a weakening US dollar and positive global factors like declining crude oil prices and robust foreign institutional inflows, the Indian rupee has remained range-bound. This situation is primarily due to the Reserve Bank of India’s (RBI) active intervention in the forex market, absorbing substantial dollar inflows to stabilize the currency. Additionally, the high trade deficit with China and the performance of the Chinese yuan are factors contributing to the rupee’s restrained movement. Analysts expect the rupee to continue trading within a narrow band in the near term, with resistance at 84 and support around 83.80.

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