USD vs INR: The Indian National Rupee (INR) continued its downside trend and hit a new low of 91.19 against the US Dollar (USD) during the early morning deals. While hitting this new low, the Indian Rupee logged a 6% dip in the year-to-date (YTD) period. While this fall in the national currency directly hit the returns of forex investors, it indirectly affected the returns of gold, silver, mutual funds, and stock market investors.
According to experts, the falling rupee has dampened the sentiments of FIIs, triggering their selling in the Indian stock market. This selling is so long that domestic institutional investors are unable to hold the bull run for long. The recent movement of the Nifty 50, from 25,750 to 26,350, is a glaring example. The FIIs’ selling is not allowing Indian stocks to sustain higher levels. Likewise, weakness in the Indian National Rupee has triggered domestic buying, which further escalated when the US Dollar Index fell below the 98 level. They stated that the weak Indian Rupee has affected most Indian assets, including gold, silver, mutual funds, and stocks.
Rupee impact on Indian stock market returns
On how the weak Indian Rupee has affected the stock portfolio of an investor, Sandeep Pandey, Co-founder of Basav Capital, said, “Weakness in the Indian National Rupee (INR) against the US Dollar (USD) has played a major role in hitting the FPIs’ sentiments regarding the Indian stock market. Since July 2025, FIIs have remained net sellers in the Indian stock market, as the weak Indian Rupee has failed to attract foreign investment and halt the outflow from Indian stocks. DIIs have tried their best to counter FIIs as DIIs have remained net buyers even when the FIIs have remained net sellers in the Indian stock market since July 21025.”
Rupee impact on gold, silver prices
Speaking on the impact that a weak rupee has on the precious bullion metals, Anuj Gupta, Director at Ya Wealth, said, “Gold and silver rates today are on an uptrend as both USD and the INR are under strong selling pressure. The US Dollar Index recently slipped below 98 and has been sustaining below this level, while the Indian Rupee hit a new low of 91.19 against the USD on Tuesday. This has fueled demand for gold and silver in both India and abroad. So, a weak rupee is allowing your gold and silver investments to grow many-fold.”
Mutual fund calculator
On how mutual fund investments got impacted due to weakness in the Indian Rupee, Jitendra Solanki, a SEBI-registered tax and investment expert, said, “Mutual fund investments are subject to market risk. When FIIs’ selling has not allowed Indian stocks to skyrocket, it has definitely affected the returns of mutual funds in the recent few months or in the YTD. However, this hit to the mutual funds’ return won’t have much impact on long-term investors, as they are receiving more NAVs against their fixed investment. In the long run, a higher number of NAVs is expected to yield more. Therefore, long-term mutual fund investors are expected to benefit from the decline in the Indian Rupee. However, for short and mid-term investors, we can’t say the same.”
India-US trade deal holds key
Asked about the reasons that are pulling down our national currency, Amit Pabari, Managing Director at FX advisory firm CR Forex, said, “The Rupee’s weakness is being driven primarily by tariff-related concerns and foreign investor selling, not by deterioration in economic fundamentals. As long as these short-term imbalances persist, pressure may continue. In the very near term, 90.00–90.20 remains a strong support zone (for the rupee).”
On how the India-US trade deal holds key for recovery in the Indian Rupee and other assets of your portfolio, Analysts at BofA said, “The Indian Rupee remains dependent on portfolio flows, partly driven by Trump’s tariffs. “Finalisation of India-US trade deal, expected to reduce the tariffs, would be important in reducing uncertainty for equity investors. Further pick-up in growth momentum would be another key factor for next year, which may support corporate earnings and ease equity valuation concerns,” it added.
Key Takeaways
- The weakening rupee affects foreign institutional investment, leading to net selling in Indian stocks.
- Investments in gold and silver are benefiting from the rupee’s decline, as demand increases.
- Long-term mutual fund investors may see benefits despite short-term volatility caused by the rupee’s weakness.
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
