The Indian Rupee (INR) has experienced notable volatility in recent weeks, impacted by various market dynamics and geopolitical developments. As of August 21, 2025, the INR closed at 87.2700 per U.S. dollar, reflecting a decline of 0.24%. This weakness was predominantly attributed to increased dollar purchases by oil-importing companies, indicating pressure on the rupee from rising import costs.
In contrast, foreign banks have been active sellers of dollars, providing some degree of support to the INR despite its overall depreciation. Analysts remain puzzled by this pattern, considering its potential implications for market behavior moving forward. Furthermore, the anticipated imposition of a 25% tariff on Indian goods by the U.S. starting August 27 could amplify existing pressures on the currency.
On a more positive note, Prime Minister Modi's proposed cuts to the Goods and Services Tax (GST) could stimulate domestic consumption and lend support to the rupee in the near term. Additionally, recent geopolitical developments, particularly easing tensions regarding India's oil trade with Russia, have alleviated some bearish sentiment surrounding the INR.
From a technical perspective, the INR to USD exchange rate is currently at 14-day lows, trading at approximately 0.011404, which is 1.4% below its 3-month average of 0.011568. The INR to EUR is at 0.009793, down 1.7% from its 3-month average, while the INR to GBP stands at 0.008448, reflecting a similar decline. The INR to JPY is slightly better off, trading near 1.6806, just 0.7% below its average.
In summary, while the INR faces headwinds from external factors like oil import pressures and looming tariffs, internal measures and favorable geopolitical shifts could provide some cushion. Market participants may wish to stay informed of ongoing developments as these factors continue to influence the rupee's trajectory in the currency markets.
