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.