Indian Rupee Remains Stable as Dollar Demand Persists

Post by : Bianca Suleiman

On Tuesday, the Indian rupee started off consistently, with only minor fluctuations as continuous dollar demand from importers and varied portfolio activities kept it stable. By 9:50 a.m. IST, the rupee was trading at 88.65 against the U.S. dollar, marginally down from Monday’s close of 88.63.

The currency has been confined within a range of 88.50 to 88.80 for almost two weeks, indicating robust market participation. Traders noted that the Reserve Bank of India's ongoing dollar sales have effectively prevented significant depreciation, even as the appetite for the dollar remains high.

Cautious sentiment was also visible in domestic equity markets, where the Sensex and Nifty 50 both fell around 0.3% during early trading, yet managed to outperform broader Asian indices, which saw declines of roughly 2% amid diminishing global risk tolerance.

Foreign investors continued to be net sellers, pulling out $1.2 billion from Indian equities in November alone, which contributed to total outflows reaching $17.2 billion for 2025. Market observers highlighted that a substantial equity block deal exerted additional pressure on the rupee, although some foreign banks were actively supplying dollars to help stabilize the inflow.

Meanwhile, earlier data indicated that India's merchandise trade deficit surged to a record $41.68 billion in October, primarily due to increased gold imports and decreased exports to the U.S. This trend has kept currency traders vigilant, particularly given the ongoing uncertainty in global markets.

The wider currency market also remained stable, with the dollar index holding steady near 99.5. Most Asian currencies saw slight declines between 0.1% and 0.6% as traders awaited significant U.S. economic announcements this week, particularly the anticipated nonfarm payrolls report for September set to be released on Thursday.

Despite the fluctuations in global markets and domestic economic activity, traders expect the rupee to maintain its established range, with limited potential for rapid movements as long as the RBI continues its presence at the upper limit of the band.