The Indian rupee closed modestly weaker on Tuesday, weighed down by a fall in local stocks and regional currencies, while likely intervention by the central bank limited the currency’s decline.
The rupee settled at 90.19 per dollar, marginally weaker than its close at 90.1625 in the previous session.
Asian currencies slipped between 0.1% to 0.8% while India’s benchmark equity indexes, the BSE Sensex and Nifty 50 declined 0.2% and 0.3% respectively, lagging most regional peers.
The deferral of Indian bonds’ inclusion in a flagship global index also singed the rupee, but the multi-front pressure was blunted by dollar-selling intervention by the Reserve Bank of India across the non-deliverable forward and local spot market.
Recovery in rupee ahead?
Despite the headwinds, some analysts say a modest recovery could be on the cards for the rupee as seasonality turns positive.
Analysts at HSBC said they “tactically favour the INR in 1Q26 due to a seasonal narrowing in the trade deficit, and assuming progress in US-India trade talks.”
The firm expects INR to strengthen to 88 per dollar by the end of March 2026 and consequently drift lower towards 90 by the end of the year.
Progress in U.S.-India trade talks remains pivotal for the currency.
Washington’s ambassador to New Delhi said on Monday that the two countries will hold a call on trade on Tuesday, though a fresh dose of uncertainty was injected by President Trump’s announcement of a 25% trade levy on any country that does business with Iran.
India’s total bilateral trade with Iran stood at $1.34 billion for the first 10 months of 2025, according to India’s commerce ministry.
Meanwhile, market participants are also awaiting the release of key U.S. inflation data later in the day while keeping their eyes peeled for developments on the ongoing threats to the U.S. Federal Reserve’s independence.
