USD vs INR: Following a sharp sell-off after the imposition of Trump’s tariffs on India, the Indian Rupee has fallen around 6% in 2025. Experts don’t expect any sign of recovery of the Indian National Rupee (INR) against the US Dollar (USD) until the India-US trade deal is signed. The Indian stock market is also facing challenges following Trump’s tariffs, as FIIs have been selling out aggressively in the Indian markets. However, compared to the Indian Rupee, the Indian stock market has shown resilience.
The Nifty 50 index has been in a tight range of 25,250 to 26,300 for an extended period. Following the optimistic signals from Indian and US officials regarding developments in the India-US trade deal, the 50-stock index has been trading at the upper end of the range, between 25,700 and 26,300. This sparks a question: Why is the Indian Rupee falling, but the Indian stock market is showing resilience or has remained stable in a particular range for a long time?
USD to INR move reflects Dalal Street design
Highlighting the reason for the Indian Rupee fall and stock market’s resilience at the same time, Ponmudi R, CEO of Enrich Money, said, “The question of whether USD/INR could drift closer to the 100 level in 2026 is no longer confined to market speculation; it has steadily entered serious macroeconomic and policy discussions. This debate, however, is not about India losing its growth momentum. Rather, it reflects how structural pressures, global forces, and shifts in domestic market design are influencing the rupee’s behaviour.”
The Enrich Money expert said India continues to be one of the fastest-growing large economies globally. Domestic consumption remains resilient, corporate balance sheets are healthier than in earlier cycles, and equity markets continue to display depth and stability. Yet, the currency market presents a contrasting picture—marked by thinning liquidity, largely one-sided price movements, and an increasing reliance on central bank intervention.
Why is the stock market stable despite the delay in the India-US trade deal?
“The currency market doesn’t enjoy the same balance theory that is available for the Indian stock market today. Whenever the Nifty 50, Bank Nifty, or Sensex corrects, domestic investors step in. Retail investors, mutual funds, and long-term allocators absorb selling pressure. Liquidity exists on both sides of the market, allowing prices to adjust in a balanced manner rather than move sharply in one direction. This participation-driven structure enables equity markets to self-correct,” Ponmudi R of Enrich Money added.
“The Indian stock market is benefiting from some proactive approach by the Indian government, which failed to trickle down in the Indian currency derivative market. Recently, the Modi government rationalised the GST and introduced a new version of the GST with just three kinds of taxes. On Wednesday, SEBI cut mutual fund fees by reducing the expense ratio. This provided liquidity to the market, as mutual fund managers would have more money in hand (AUM) to counter FIIS selling. Remember, FIIs have remained net sellers in the Indian stock market since July 2025. This has created a new challenge of USD outflow from India, which is putting additional pressure on the Indian Rupee,” Avinash Gorakshkar, a SEBI-registered fundamental equity analyst.
Gorakshkar said that the delay in the India-US trade deal is not allowing the Reserve Bank of India to control external triggers, such as Trump’s tariffs, and the challenges caused by the trade war in the global merchandise market. So, the Indian Central Bank didn’t intervene until the Indian Rupee went past 91 against the US Dollar. It allowed for a level playing field for Indian exporters. However, it had to sell the US Dollar aggressively on Tuesday, which enabled the Indian Rupee to show some resilience in the last two sessions.
Highlighting the recent changes made by SEBI in the exchange-traded currency derivative market, Ponmudi R said, “Following regulatory changes in 2024 that restricted participation in exchange-traded currency derivatives to entities with proven underlying exposure, a large section of liquidity providers exited the market. Retail traders, proprietary desks, and arbitrage participants—who historically ensured two-way liquidity and efficient price discovery—were effectively removed from the ecosystem.”
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.
