MUMBAI: The Indian rupee fell to a one-month low on Friday, and logged its third straight weekly decline, pressured by outflows from local stocks and caution among investors ahead of a news-heavy week dominated by tariffs and central bank decisions.
The rupee closed at 86.5150 against the U.S. dollar on Friday, down 0.4% on the week. The local currency hit a low of 86.6250 earlier in the session, its weakest level since June 23.
India’s benchmark equity indexes, the BSE Sensex and Nifty 50, fell about 0.9% each, weighed down by a fall in global equities alongside worries over weak corporate earnings and a delayed U.S.-India trade deal.
Dollar sales from local private banks, likely on behalf of exporter clients, helped limit the rupee’s losses, a trader at a Mumbai-based bank said.
The dollar index was up 0.2% at 97.7 while Asian currencies declined by as much as 0.7%.
Next week is poised to be eventful, with trade talks between U.S. and China, monetary policy decisions from the U.S. Federal Reserve and Bank of Japan, the reciprocal tariff deadline, and key U.S. economic data expected to keep traders on their toes.
Dip in Asian currencies, outflows likely to keep up pressure on Indian rupee
The odds of a rate-cut by the Fed are near-zero but investors will keep an eye on commentary from the Fed Chair and whether the decision is unanimous.
“We maintain our view that the impact of tariffs will be transitory and that it will be appropriate for the FOMC to resume cutting interest rates gradually in September (by 25bp) with another 25bp cut in December,” ANZ said in a Friday note.
The chances of a rate cut in September are currently around 60%, per CME’s FedWatch tool.
Evolving rate cut expectations will also be in focus locally as cooling inflation has prompted calls for at least one more interest rate cut this year. The RBI slashed rates by 100 bps over the first half of the year.
American Dollar Exchange Rate