INR & NPR - Markets & outlook
Indian rupee - INR:
October 19, 2025
Key Developments Affecting the Indian Rupee (INR):
1. Reserve Bank of India's (RBI) Market Intervention: On October 15, 2025, the RBI intervened in the foreign exchange market by selling between $3 billion to $5 billion to stabilize the rupee, which had been under pressure due to U.S. tariffs and rising gold imports. This intervention led to the rupee's largest single-day gain in four months. (reuters.com)
2. Shift in Market Sentiment: Following the RBI's intervention, the options market showed a significant tilt in favor of the rupee, with the 1-month 25-delta risk-reversal for the USD/INR pair dropping to -0.8, the lowest level since 2012. This indicates increased demand for rupee call options over puts. (reuters.com)
3. U.S.-India Trade Relations: In August 2025, the U.S. imposed a 50% tariff on Indian exports, including a 25% "reciprocal" tariff and an additional 25% penalty related to India's imports of Russian oil. India criticized these measures as "unfair" and "unreasonable," leading to heightened trade tensions. (en.wikipedia.org)
4. Global Economic Factors: The U.S. Federal Reserve's monetary policy, including interest rate decisions, continues to influence the USD/INR exchange rate. A stronger U.S. dollar, driven by higher U.S. yields, has contributed to the rupee's depreciation. (business2business.co.in)
Recent Developments Impacting the Indian Rupee:
- India central bank deployed $5 billion life jacket to aid struggling rupee, bankers estimate, Published on Wednesday, October 15
- Options tilt most in favour of Indian rupee in over a decade after heavy RBI intervention, Published on Thursday, October 16
- Rupee touches one-month high, importer bids cap gains, Published on Thursday, October 16
Nepalese rupee - NPR:
October 19, 2025
Key Developments Affecting the Nepalese Rupee (NPR):
1. Pro-Monarchy Protests (March–May 2025):
- Intensified demonstrations in Kathmandu advocating for the restoration of the Hindu monarchy, leading to a two-month prohibitory order in key areas of the capital. (en.wikipedia.org)
2. Gen Z Protests and Political Unrest (September 2025):
- Nationwide anti-government protests, primarily led by Generation Z, resulted in the storming of the Federal Parliament Building and the resignation of Prime Minister K.P. Sharma Oli. (en.wikipedia.org)
3. Monetary Policy Adjustments (July 2025):
- Nepal Rastra Bank (NRB) reduced the bank rate from 6.5% to 6% and the policy rate from 5% to 4.5%, aiming to stimulate economic activity. (bestexchangerates.com)
4. Social Media Regulation (March 2025):
- The government mandated that platforms like Facebook, Instagram, and X (formerly Twitter) register in Nepal within a month or face potential bans, impacting digital communication and business operations. (bestexchangerates.com)
These events have contributed to increased volatility in the NPR, affecting investor confidence and economic stability.
