The currency has remained sideways even as the greenback has been rising for nearly a month
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The rupee was down 0.14 per cent against the dollar on Tuesday and ended the session at 88.80. Nevertheless, for nearly three weeks, the dollar-rupee exchange rate has been stable. Tuesday’s decline has not changed this trend.
The currency has remained sideways even as the greenback has been rising for nearly a month. The reason is that the dollar has largely been deriving its strength from the weakness in the euro and the yen, keeping the impact lower on the rupee.
On the other hand, certain factors have been favourable for the Indian unit. Over the past week, net FPI inflows, as per NSDL data, stood at $0.8 billion. Also, CPI and WPI inflation softened to 1.54 per cent and 0.13 per cent for September, compared to 2.07 per cent and 0.52 per cent for August.
The fall in oil prices, too, has been helping the rupee to remain steady. Brent crude oil price ($62/barrel) is down a little over 6 per cent so far in October. The price can dip further as IEA (International Energy Agency), in their latest report, has projected a lower demand of 7,10,000 barrels per day (bpd) versus their earlier estimate of 7,40,000 bpd.
In addition, the sentiment has been upbeat in the domestic equity market in the recent weeks – the benchmark Nifty 50 has appreciated 2 per cent so far this month.
Overall, with respect to fundamental factors, the rupee seems to have an advantage at the moment as the dollar faces challenges such as US government shut down and potential rate cuts. Below is the analysis of charts.
Chart
The rupee has been consolidating between 88.60 and 88.90 since September 24. Nevertheless, as per the chart, there are no signs of a bullish reversal yet, although the bears have lost traction.
If the rupee breaks out of 88.60, it can turn the near-term outlook positive, opening the door for a rise to 88.25 and potentially to 88. However, if it slips below the support at 88.90, it can extend the downswing to 90.
With respect to the dollar index, it is now testing a resistance at 99.50. Above this is another barrier at 100. Only a clear breakout of the latter can change the outlook positive. In such a scenario, the dollar index can quickly rise to 101.50 and 101.80.
But if it falls off the barrier at 99.50, it can drop to 98.70 and 97.60.
Outlook
Broadly, assuming that the dollar index will remain below the resistance at 99.50 and the challenges remain, we expect the rupee to inch up to 88.20-88.30 range in the near-term.
Published on October 14, 2025
