The Indian Rupee (INR) has recently faced pressure, primarily due to increased dollar purchases by oil-importing companies, leading to a 0.24% decline and a closing rate of 87.2700 per U.S. dollar on August 21, 2025. Analysts note that this move heightened concerns among traders regarding the stability of the rupee.
Despite this depreciation, the market observed foreign banks actively selling dollars, which has somewhat cushioned the currency’s decline. However, the reasons behind these sales remain unclear to many market participants. The outlook for the rupee may further be influenced by the impending imposition of additional U.S. tariffs on Indian goods set for August 27, which could exacerbate the current downward momentum.
In contrast, a proposed reduction in the goods and services tax (GST) by Prime Minister Modi is seen by experts as a potential catalyst for domestic consumption and economic stimulation, possibly bolstering the rupee in the near term. Meanwhile, positive geopolitical events, such as diplomatic discussions between U.S. and Russian leaders, have alleviated some market fears regarding sanctions that could impact India's oil trade, providing a degree of relief to the currency.
Recent price data indicates that the INR to USD pair at 0.011456 is 1.1% below its three-month average, maintaining stability within a 3.3% range. Similarly, the INR to EUR rate is also below its three-month average, while the INR to GBP has reached 14-day highs, indicating a level of resilience. The INR to JPY has also shown strength, trading above its recent average.
Overall, the INR appears to be navigating a complex landscape of domestic policy responses and external pressures. Stakeholders may want to monitor these developments closely, as shifts in tariff policies, geopolitical relations, and domestic economic measures could critically influence the rupee's trajectory in the coming weeks.
