The rupee touched an intraday low of 87.89 on Tuesday against the dollar before ending the session at 87.80*. Over the past week and month, the local currency has lost 1.13 per cent and 2.75 per cent respectively. Previously, on February 10, it marked a low of 87.95.
The rupee failed to make gains despite the dollar depreciation on the back of weak jobs and manufacturing numbers. Data from last week shows that the US added 73,000 non-farm jobs versus the expected 106,000. Worse was the downward revision of jobs added in June from 147,000 to 14,000.
Also, the Manufacturing PMI (Purchasing Managers’ Index) for July came in at a lower 48 as against the forecasted 49.5, showing continued contraction. Yet, the rupee was under pressure.
Trump’s threat of a substantial increase in tariffs on India is weighing on the domestic currency. Apart from the tariff uncertainty, there have been a net FPI (Foreign Portfolio Investors) outflows amounting to $1.4 billion over the past week, adding to the woes.
Domestic Manufacturing PMI and Services PMI for July stood at 59.1 and 60.5 respectively, showing expansion. But it didn’t help in a recovery so far. Below is the analysis of charts.
Chart
The rupee opened Tuesday’s session at record low of 87.82 versus Monday’s close of 87.66. It recouped some of its losses and closed at 87.80.
The chart shows a clear bear trend and chances are high for further decline. That said, rather than extending the downswing from the current level, the rupee might gain a little, probably to 87.40 or 87.20, potential resistance levels. Above this is another strong barrier at 87.
So, the extension of downtrend, either from the current level or after a recovery to the aforementioned resistance levels, can drag the local unit to 88.20 and then to 88.50. To negate this view, the rupee ought to decisively breach the hurdle at 87.
But that looks less likely especially considering that the price action of the dollar index hints at a rally despite the recent moderation. From the current level of 98.90, the index might appreciate to 100 and then move up further to 101.15.
Notably, the chart of the dollar index shows a falling wedge chart pattern and as per this, the upside can extend to 102.30. Such a move can negatively impact the rupee, increasing the probability for a fall to 88.50 soon.
Outlook
The downtrend in the rupee appears intact. In the near-term, we expect the rupee to decline to 88.20, either from the current level itself or after witnessing a limited recovery.
Published on August 5, 2025
