Finance
Despite trade concerns and foreign equity outflows, the Indian Rupee ended Monday flat after hitting a record intraday low for the second consecutive session.
According to Bloomberg, the local currency ended Monday’s trading session 1 paise higher at 88.20 versus the US dollar. The currency dropped to a record low of 88.34 versus the US dollar during the session. The rupee has lost 2.93 percent of its value so far this year, making it the worst-performing of its Asian counterparts.
According to Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP, the currency may continue to be under pressure as sentiment is affected by US tariffs, withdrawals of foreign portfolio investors, and weakness in government bonds. The 10-year bond’s yield increased to over 6.70 percent before falling to 6.59%.
Even as India and the US continue their trade and tariff negotiations, Bhansali predicted that the 50% tariffs will negatively impact portfolio inflows. Foreign portfolio investors have dumped about 1.4 trillion naira worth of domestic stocks so far this year.
In the meantime, India’s GDP reached a five-quarter high in the first quarter (April–June) of the fiscal year 2025–26 (FY26), growing 7.8%. Nonetheless, during the June quarter, nominal GDP grew 8.8% to ₹86.05 trillion. Analysts predicted that the second quarter would see a slowdown as a result of the tariffs’ knock-on impacts.
Foreign exchange reserves fell by $5 billion to $691 billion as of August 22, 2025, as the RBI sold dollars to support the rupee. The central bank may allow further depreciation to maintain competitiveness against peers facing lower tariffs, Bhansali said. “Exporters who sold at 87.80 may now wait for further declines, while importers are advised to hedge on major dips and cover near-term payables on smaller ones.”
In global news, Indian Prime Minister Narendra Modi stated during a crucial meeting with President Xi Jinping on Sunday that New Delhi was dedicated to strengthening its relations with China. In light of US tariffs, both leaders talked about the necessity of extending trade and investment links.
At 97.64, the dollar index, which compares the US dollar to a basket of six major currencies, was down 0.13 percent. This follows a US federal appeals court’s decision that trade tariffs imposed by US President Donald Trump were unlawful.
Crude oil prices increased in the commodities market as demand was impacted by US tariffs. As of 3:40 PM IST, the price of Brent crude was up 0.93 percent at 68.11 per barrel, while the price of WTI crude was up 1.03% at 64.67 per barrel.
Source: BS
