emirates7 - The Indian rupee resumed its downward trend on Monday, influenced by expected equity outflows and corporate hedging.
At 11:24 am IST, the rupee was trading at 86.3675 against the U.S. dollar, down from 86.2050 on Friday. The local currency had previously seen a 0.5% recovery last week, reaching a two-week high, as emerging market currencies gained relief following U.S. President Donald Trump's decision not to impose tariffs immediately on its trading partners.
"Each day without a tariff-related announcement for major partners brings hope that Trump may ease his aggressive policies," said Srinivas Puni, managing director at QuantArt Market Solutions.
The USD/INR pair had seen a pullback, correlating with the weakness in the U.S. dollar. This softness is dependent on the Federal Reserve maintaining a neutral stance and Trump delaying any aggressive tariff actions, Puni added.
The further decline in Indian stocks on Monday also weighed on the rupee. The Nifty 50 Index dropped by about 1%, with foreign investors having withdrawn $7.5 billion in stocks from India this month.
The ongoing equity outflows and corporate hedging suggest that any gains in the rupee are likely to be short-lived, according to a currency trader at a bank.
Attention is now on the Federal Reserve. This week, the Fed is expected to leave the policy rate unchanged, with no new projections on inflation or interest rates. The focus will shift to Fed Chair Jerome Powell's press conference, where analysts will look for clues about whether the expected decline in inflation could pave the way for rate cuts and how the Fed plans to manage the uncertainty surrounding potential tariff hikes and their impact on prices, Goldman Sachs noted.
At 11:24 am IST, the rupee was trading at 86.3675 against the U.S. dollar, down from 86.2050 on Friday. The local currency had previously seen a 0.5% recovery last week, reaching a two-week high, as emerging market currencies gained relief following U.S. President Donald Trump's decision not to impose tariffs immediately on its trading partners.
"Each day without a tariff-related announcement for major partners brings hope that Trump may ease his aggressive policies," said Srinivas Puni, managing director at QuantArt Market Solutions.
The USD/INR pair had seen a pullback, correlating with the weakness in the U.S. dollar. This softness is dependent on the Federal Reserve maintaining a neutral stance and Trump delaying any aggressive tariff actions, Puni added.
The further decline in Indian stocks on Monday also weighed on the rupee. The Nifty 50 Index dropped by about 1%, with foreign investors having withdrawn $7.5 billion in stocks from India this month.
The ongoing equity outflows and corporate hedging suggest that any gains in the rupee are likely to be short-lived, according to a currency trader at a bank.
Attention is now on the Federal Reserve. This week, the Fed is expected to leave the policy rate unchanged, with no new projections on inflation or interest rates. The focus will shift to Fed Chair Jerome Powell's press conference, where analysts will look for clues about whether the expected decline in inflation could pave the way for rate cuts and how the Fed plans to manage the uncertainty surrounding potential tariff hikes and their impact on prices, Goldman Sachs noted.