The rupee is less likely to witness more upside from here as the dollar struggles to find feet
| Photo Credit:
The rupee ended flat at 88.26 against the dollar on Tuesday. But over the past week it has moderated compared to the previous Tuesday’s close of 87.98, thereby giving up nearly half of the gains it secured over the past couple of weeks.
That said, the rupee is less likely to witness more upside from here as the dollar struggles to find feet. The CPI (Consumer Price Index) inflation for September in the US came in at a lower-than-expected level of 3 per cent versus 3.1 per cent. This has increased the odds for a rate cut by the Fed during Wednesday’s meeting. This can weigh on the greenback, a positive for emerging market currencies like the rupee.
Also, helping the rupee could be foreign inflows aided by the buoyed domestic equity market, which is now hovering near all-time high. According to NSDL data, net FPI inflows over the past week stood at $237 million and, given the positivity in the market, foreign inflows can continue.
There are challenges for the domestic unit such as the recent rise in the crude oil prices – Brent crude oil ($65/barrel) shot up over 7 per cent last week. That said, at a broader level, the rupee is likely to gain considering the fundamental factors.
Below is the technical analysis.
Chart
The rupee has dropped so far this week. However, currently trading at 88.26, it has a support ahead at 88.35. So, we expect the currency to recover either from current levels itself or from 88.35.
The upside can lift the rupee to 87.70, a resistance. A decisive breakout of this level gives a good positive impetus, which can potentially take the local currency to 87.35. On the other hand, if the rupee breaches the support at 88.35, it can open the door for a decline to 88.90.
The dollar index, currently trading at 98.75, is expected to trade flat ahead of the interest rate decision by the Fed. If the outcome triggers a fall, the index can slip to 97.60, a support. This is positive for the rupee.
But if it rallies, it will face a barrier between 99.50 and 100. Only a clear breakout of the latter can turn the outlook positive, which could weigh on the Indian unit.
Outlook
At the current juncture, the rupee has positive inclination. We expect it to appreciate to 87.70 in the coming days, unless the US Fed throws a surprise by keeping the policy rate unchanged.
Published on October 28, 2025
