The Indian rupee appreciated by 71 paise last week, closing at 87.975 per US dollar on October 17 (Friday), compared to the previous week’s close of 88.6850. This strengthening is attributed to the weakening of the dollar, declining crude oil prices, and optimistic expectations regarding US-India tariff negotiations.
Market analysts suggest that the rupee could receive additional support from potential capital inflows projected at $3 billion, stemming from Emirates NBD’s proposal to acquire up to a 60 percent stake in RBL Bank. This anticipated inflow may lead to currency traders shorting the dollar, further bolstering the rupee, which could see a gain of 25-30 paise on upcoming trading days.
Madan Sabnavis, Chief Economist at Bank of Baroda, noted the rupee’s volatility, highlighting a previous expectation that it could surpass the ₹89 mark. However, significant corrections have since positioned the currency within a range below ₹88. Sabnavis cautioned that ongoing uncertainty surrounding tariff discussions implies the rupee may trade within a narrower range of 87.75-88.50 for the remainder of the month.
Riya Singh, a Research Analyst in Commodities and Currency at Emkay Global Financial Services, observed that the rupee experienced a sharp recovery after the Reserve Bank of India (RBI) intensified intervention measures to counteract perceived speculative pressures. The RBI actively sold dollars in both onshore and offshore markets to prevent the currency from nearing the critical threshold of ₹89 per dollar.
Singh emphasized that the RBI aims to defend the record low of 88.8050 and has a robust reserve position, approximately $700 billion, to support its efforts. She anticipated continued intervention by the RBI until speculative positions stabilize. While the rupee may trade sideways amid upcoming holidays, sustained foreign inflows and progress in trade talks could lead to further strengthening in the weeks ahead.
Published on October 19, 2025.
