The rupee closed at 88.6050 against the U.S. dollar, nearly unchanged from its close at 88.63 in the previous session.
Asian currencies were down between 0.1% and 0.4% while MSCI’s gauge of regional stocks fell over 2%, tracking an extended selloff on Wall Street overnight as investors turned cautious ahead of a key earnings report and a deluge of U.S. economic data.
Futures indicated that U.S. stocks were set to open modestly lower.
India’s benchmark equity indexes, the BSE Sensex and Nifty 50 ended the day a tad lower but fared better than their regional counterparts.
The rupee was influenced by both portfolio inflows and outflows, alongside state-run banks’ intermittent dollar sales, which limited the currency’s decline, traders said.
Unless the Reserve Bank of India steps away from defending the 88.80 level or there is a breakthrough in U.S.-India trade negotiations, expect rupee to hover in a 88.40-88.80 range, a trader at a Mumbai-based bank said.
Sluggish exports to the U.S. drove India’s merchandise trade deficit to a record high last month.
“At this run rate, the current account deficit could more than double in FY26; eventually, rupee depreciation may act as an automatic stabiliser,” economists at HSBC said in a note. The rupee has declined about 1% since tariffs of up to 50% on Indian exports came into effect.
Meanwhile, the dollar index was steady at 99.5 as investors awaited U.S. data for signals on the Federal Reserve’s next move. Odds of a Fed rate cut next month have slipped to a little under 50% currently, down from near 67% a week earlier.
