The rupee recovered 15 paise from its all-time low to 88.65 against the U.S. dollar on Wednesday (October 1, 2025), after the Reserve Bank Governor delivered a dovish pause, broadly in line with market expectations.

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Reserve Bank of India (RBI) expectedly left its key interest rates unchanged on Wednesday (October 1, 2025), as it waited for greater clarity on the impact of U.S. tariffs as well as playout of earlier rate cuts and recent tax reductions.

RBI Governor Sanjay Malhotra, however, signalled scope for easing in the coming months to support the economy from any possible hit from U.S. tariffs.

The six-member monetary policy committee voted unanimously to keep the repurchase rate unchanged at 5.5% and decided to continue with a “neutral” policy stance, giving it flexibility to move in either direction if needed in future.

At the interbank foreign exchange, the rupee opened at 88.79 against the U.S. dollar, then rose to 88.65, higher by 15 paise from its previous close.

On Tuesday (September 30, 2025), the rupee fell 5 paise to an all-time low of 88.80 against the U.S. dollar.

Meanwhile, the Reserve Bank of India on Wednesday (October 1, 2025) announced a slew of measures, including allowing banks to lend in Indian Rupees to non-residents from Bhutan, Nepal and Sri Lanka for bilateral trade to promote the use of domestic currency for cross-border settlements.

RBI Governor Sanjay Malhotra proposed to establish transparent reference rates for currencies of India’s major trading partners to facilitate INR-based transactions.

RBI has permitted wider use of Special Rupee Vostro Account (SRVA) balances by making them eligible for investment in corporate bonds and commercial papers.

SRVA is an account opened by a foreign bank with an Indian bank to facilitate international trade settlements directly in Indian Rupees (INR). These measures will help reduce dependence on the U.S. dollar and thus shield the economy from sudden exchange rate fluctuations and currency crises.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading at 97.61, lower by 0.16%.

Brent crude, the global oil benchmark, was trading 0.24% higher at $66.19 per barrel in futures trade.

On the domestic equity market front, benchmark indices Sensex and Nifty extended early gains and were trading significantly higher on Wednesday, helped by buying in bank stocks.

Foreign Institutional Investors offloaded equities worth ₹2,327.09 crore on Tuesday (September 30, 2025), according to exchange data.

Meanwhile, the Centre’s fiscal deficit stood at 38.1% of the full-year target at the end of August, according to data released by the Controller General of Accounts (CGA) on Tuesday (September 30, 2025).

The fiscal deficit was 27% of the Budget Estimates (BE) of 2024-25 in the first five months of the previous financial year.

The rupee depreciated 28 paise to close at 88.13 (provisional) against the U.S. dollar on Thursday (September 18, 2025), on hawkish Fed and a bounce back in the U.S. dollar.

Forex traders said traders assessed the U.S. FED outlook following a rate cut. The U.S. FED reduced rates by a quarter point as expected and indicated that it will steadily lower borrowing costs for the rest of the year.

Moreover, the rupee remained under pressure on worries over U.S. tariffs on India and global trade uncertainties. Besides, sustained foreign fund outflows also dented investor sentiments.

At the interbank foreign exchange, the rupee opened at 87.93 against the U.S. dollar and touched an intra-day low of 88.16 before ending the session at 88.13 (provisional), down 28 paise from its previous close.

On Wednesday (September 17, 2025), the rupee appreciated 24 paise to close at 87.85 against the U.S. dollar.

The Indian rupee declined sharply on hawkish Fed and a bounce back in the U.S. dollar. Fed cut interest rates by 25 bps, in line with estimates. It sees two more 25 bps rate cut in 2025 and just one 25 bps rate cut in 2026.

“Fed Chair Jerome Powell does not see elevated financial risks on tariffs. However, he raised downside concerns over labour market and GDP growth,” Anuj Choudhary, Research Analyst Currency and commodities Mirae Asset ShareKhan, said.

Mr. Choudhary added that positive domestic markets and expectations of fresh FII inflows may also support the rupee. However, any recovery in the U.S. dollar and/or U.S. treasury yields may cap sharp upside.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.02% to 96.89.

Brent crude, the global oil benchmark, was trading 0.43% lower at $67.66 per barrel in futures trade.

On the domestic equity market front, the Sensex jumped 320.25 points to settle at 83,013.96, while the Nifty rose 93.35 points to 25,423.60.

Foreign Institutional Investors sold equities worth ₹1,124.54 crore on a net basis on Wednesday (September 17, 2025, according to exchange data.

Meanwhile, Union Commerce Minister Piyush Goyal on Wednesday (September 17, 2025) expressed confidence that India’s exports would grow around 6% this year compared to the corresponding period in 2024.

Underscoring the country’s strong performance in global trade despite challenges, the minister said discussions on free trade agreements (FTAs) were advancing with several countries.

“India’s exports would grow around 6% this year compared to the corresponding period last year. I believe we will end the year on a positive note,” Mr. Goyal said, adding that discussions on free trade agreements (FTAs) were advancing with several countries.

The rupee depreciated 16 paise to close at 87.82 (provisional) against the U.S. dollar on Tuesday (August 5, 2025), as risk-off sentiment deepened after U.S. President Donald Trump renewed his threat to raise tariffs on Indian goods over New Delhi’s continued purchases of Russian oil.

Forex traders said the rupee is likely to slide further as India-U.S. trade deal uncertainty continues to dent domestic market sentiments.

Moreover, weak equity markets dented investors’ sentiments further. However, the domestic unit pared initial losses on supposed intervention by the Reserve Bank of India (RBI).

A soft U.S. dollar and overnight decline in crude oil prices also cushioned the downside to some extent, they said.

At the interbank foreign exchange, the domestic unit opened at 87.95 against the greenback, and during the day, it touched an intra-day high of 87.75 against the American currency.

At the end of Tuesday’s (August 5, 2025) trading session, the domestic unit was at 87.82 (provisional), down 16 paise over its previous close.

On Monday (August 3, 2025), the rupee depreciated 48 paise to close at 87.66 against the U.S. dollar.

In a fresh trade threat against India, President Donald Trump on Monday (August 3, 2025) said he will “substantially” raise U.S. tariffs on New Delhi, accusing it of buying massive amounts of Russian oil and selling it for big profits.

Last week, the Trump administration slapped a 25% duty on all Indian goods. The U.S. president also announced a penalty for buying “vast majority” of Russian military equipment and crude oil.

“We expect the rupee to continue to slide as India-U.S. trade deal uncertainty continues to dent domestic market sentiments. Weak tone in the domestic equities and FII outflows may further pressurise the rupee,” Anuj Choudhary, Research Analyst, Commodities Research, Mirae Asset Sharekhan, said.

Mr. Choudhary added that “the rupee may also remain weak ahead of the RBI’s monetary policy. Market expects a rate cut by the central bank. However, overall weakness in the U.S. dollar amid rising odds of a rate cut by the Fed in September may support the rupee at lower levels”.

Meanwhile, investors remain cautious ahead of the RBI monetary policy decision this week.

RBI Governor Sanjay Malhotra-headed rate-setting panel on Monday (August 3, 2025) started the three-day deliberations to decide the next bi-monthly monetary policy.

The six-member Monetary Policy Committee (MPC) is scheduled to announce the next bi-monthly policy rate on Wednesday (August 6, 2025).

Meanwhile, Brent crude prices fell 0.97% to $68.09 per barrel in futures trade, after OPEC+ agreed to hike another large output increase in September, adding to oversupply concerns after U.S. data showed lacklustre fuel demand.

The dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.18% to 98.68.

In the domestic equity market, the 30-share BSE Sensex advanced 308.47 points, or 0.38%, to close at 80,710.25, while the Nifty rose 73.20 points, or 0.30%, to settle at 24,649.55.

Foreign institutional investors (FIIs) offloaded equities worth $2,566.51 crore on a net basis on Monday (August 3, 2025), according to exchange data.