The Indian rupee faces pressure but encountered resistance due to strong dollar demand from importers and foreign banks. On July 28, 2025, the currency fell to 86.2725 against the U.S. dollar, its weakest level in nearly a month, with a daily drop of 0.1%. This followed an early low of 86.35, driven by consistent buying from local and foreign financial institutions.
Reasons for Indian Rupee Faces Pressure
The rupee’s challenges stem from broader pressures, including weaker performance among Asian currencies and uncertainty surrounding U.S.-India trade negotiations, with a key deadline approaching on August 1, 2025. The Reserve Bank of India (RBI) has been intervening through dollar sales to manage volatility, though foreign exchange reserves have reportedly declined to a six-month low.
Market trends show a modest premium of 0.20/0.30 paisa on the dollar-rupee daily fix, indicating strong dollar demand. Despite gains in India’s equity markets, such as the BSE Sensex and Nifty 50, the rupee struggled to gain traction due to sustained foreign portfolio outflows. Analysts project the currency may hover in the 84-86 range in the near term, influenced by trade deal outcomes and global monetary policies, particularly from the U.S. Federal Reserve.
Published in SouthAsianDesk, July 28th, 2025
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