October 1, 2025

The Indian rupee showed a small but hopeful bounce on Wednesday, climbing 5 paise to 88.75 against the US dollar early in trade. This happened ahead of the big event — the Reserve Bank of India's Monetary Policy Committee meeting that started on September 29. Forex traders saw the rupee move in a tight range after it had hit its lowest-ever level of 88.80 on Tuesday. This slide was mainly caused by heavy selling from Foreign Institutional Investors (FIIs) and worries about growing trade tensions. According to exchange data, FIIs sold equities worth a whopping ₹2,327.09 crore on Tuesday. This heavy sell-off dimmed the market spirit and pushed the rupee lower. Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, said, “US President Donald Trump's constant pressure over India's Russian oil purchases have dampened the rupee sentiment and affected the overall equity market sentiment, thus keeping India into a worst performing market in terms of rupee and equities.” Bhansali added, “The RBI's support on rupee has been limited but the broader trend for the USD/INR pair remains negative amid strong dollar demand and cautious outlooks on India macroeconomic factors.” The RBI's Monetary Policy Committee started its three-day decision-making on September 29. Investors expect the RBI to keep interest rates unchanged, but the official announcement will give more clarity amid shaky geopolitical conditions and new US tariffs hitting Indian exports by 50 percent. Meanwhile, the global dollar stayed strong. The dollar index, which measures its power against six major currencies, was up slightly to 97.84. Brent crude oil also nudged higher, trading at $66.13 per barrel. On the home front, the stock markets shrugged off some worries with the Sensex rising by 142.63 points to 80,410.25, and Nifty climbing 50.75 points to 24,661.85 in early trading. Adding to the economic picture, the Indian government's fiscal deficit reached 38.1 percent of its full-year target by the end of August. This is a jump from last year's 27 percent in the same five-month period, according to data from the Controller General of Accounts (CGA). In these tense times, with global pressures and money flowing out fast, all eyes are glued to the RBI for its next move. Will the rupee regain strength? Can the markets recover? Stay tuned as the drama unfolds.

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Tags: Indian rupee, Foreign institutional investors, Rbi monetary policy, Equity market, Fiscal deficit, Us dollar,