Rupee Sees Mild Recovery Amid U.S. Trade Talks, Faces Dollar Pressure

The Indian rupee showed a modest recovery on Monday, buoyed by news of upcoming U.S.-India trade discussions. However, the currency was expected to face resistance at the opening of Tuesday’s trading session due to the dollar’s strength and hedging activities by importers. The one-month non-deliverable forward indicates the rupee could open in the 88.66–88.68 range against the U.S. dollar, remaining largely unchanged from Monday’s 88.67.

The rupee briefly strengthened past 88.60 on Monday, supported by the Reserve Bank of India’s efforts to keep it above the 89 level and positive market sentiment following reports of an Indian trade delegation visiting the United States.

A trader from a private sector bank noted, “There’s been plenty of noise around the U.S.-India trade deal. Unless there are concrete deliverables, it won’t significantly impact the currency.” He added that the market is now looking for tangible outcomes to provide sustained support, particularly amid continued hedging activity by importers.

Foreign investor activity has provided some relief to the currency. According to NSDL data, foreign investors bought Indian shares for four consecutive sessions through last Friday, reversing a period of consistent outflows. On October 10, they purchased a net $309.3 million in equities and $8.9 million in bonds. The data for Monday will be released later in the day.

Global Dollar Movements and Trade Dynamics

The U.S. dollar gained strength as concerns over the U.S.-China trade standoff eased. U.S. President Donald Trump’s recent softer stance toward China lifted the dollar on Monday, while political uncertainties in Europe and Japan kept the euro and yen under pressure.

After announcing 100% tariffs on Chinese goods on Friday, Trump struck a calmer tone over the weekend. U.S. Treasury Secretary Scott Bessent expressed optimism that the situation could be “de-escalated.” Market analysts, including MUFG Bank, interpreted the dollar’s recovery as a tactical move ahead of Trump’s planned meeting with Chinese President Xi Jinping later this month.

Conclusion

While the Indian rupee experienced a mild rebound on the back of U.S.-India trade talks and support from the RBI, persistent global dollar strength and hedging by importers are expected to limit further gains. Foreign investor inflows have provided some relief, but market participants remain cautious, awaiting concrete trade developments that could influence the currency’s trajectory.