The Indian rupee (INR) is currently navigating a complex landscape influenced by various global and domestic factors. Recent actions by the U.S., such as the imposition of a 26% reciprocal tariff on Taiwanese goods, have exacerbated concerns surrounding trade dynamics and economic growth, leading to a temporary weakening of the dollar. Analysts suggest that this creates a mixed backdrop for the rupee, with risks being described as "broadly balanced" at present levels.
The rupee has recently shown signs of weakness against the dollar, primarily due to rising energy prices, which threaten to spur inflation in India, the world's third-largest oil consumer. With the country relying heavily on oil imports, increased crude prices could have a significant impact on domestic economic conditions. Investors are currently shedding Asian currencies, including the INR, amidst a stronger dollar bolstered by expectations surrounding President Trump's economic policies, including potential tax cuts and deregulation.
Recent data indicates that the INR to USD exchange rate is 0.011580, just 0.9% below its three-month average of 0.011684, within a stable range of 0.011531 to 0.011873. In contrast, the INR has dipped to 90-day lows against the Euro at 0.009985, which is 3.6% below the three-month average of 0.010359, reflecting a more volatile trading environment. The INR to GBP stands at 0.008549, 2.7% under its three-month average, having experienced a relatively stable range. Meanwhile, the INR to JPY sits just below its three-month average at 1.6888, demonstrating a stable trading pattern.
Experts believe that ongoing geopolitical tensions, particularly following India's recent military actions and the potential for further escalation in relations with Pakistan, could add to the currency's uncertainty. As policymakers and investors digest these developments, the Indian rupee is expected to remain sensitive to both domestic events and international economic shifts.