Rupee Rebounds: INR Inches Up to 88.2750 Against Dollar Amid Global Currency Jitters

In a modest but meaningful recovery, the Indian Rupee (INR) appreciated by 19 paise to close at 88.2750 against the US Dollar on September 12, 2025, compared to its previous close of 88.4425. The uptick comes amid a volatile global currency landscape, driven by shifting expectations around US Federal Reserve policy, foreign institutional inflows, and India’s own macroeconomic resilience. While the gain may appear incremental, it signals a stabilizing trend after weeks of pressure on the domestic currency.

Market Movement and Drivers

1. The rupee opened stronger in early trade, buoyed by positive sentiment in domestic equities and a softer dollar index.
2. Foreign Institutional Investors (FIIs) continued their buying streak in Indian markets, injecting liquidity and supporting the rupee’s upward movement.
3. The dollar index, which measures the greenback against a basket of six major currencies, weakened slightly due to disappointing US non-farm payroll data and rising unemployment figures.
4. Brent crude prices remained stable, easing concerns over India’s import bill and supporting the rupee’s recovery.
5. The Reserve Bank of India (RBI) is believed to have intervened in the spot and non-deliverable forward (NDF) markets to cap volatility and prevent further depreciation.

Global Context and Fed Watch

1. The US Federal Reserve is expected to announce a rate cut in its upcoming FOMC meeting on September 17, following signs of economic slowdown.
2. A dovish Fed stance typically weakens the dollar, making emerging market currencies like the rupee more attractive.
3. However, any upside surprise in US inflation data could complicate the Fed’s path and inject fresh volatility into currency markets.
4. Traders are closely watching CPI data due on September 11, which will likely influence short-term rupee movement.

Domestic Factors Supporting INR

1. India’s macroeconomic buffers remain strong, with healthy forex reserves and a narrowing current account deficit.
2. The Sensex and Nifty rallied in early trade, reflecting investor confidence and supporting the rupee’s momentum.
3. RBI’s active management of currency volatility has helped maintain INR within a stable band, despite external pressures.
4. Exporters have begun hedging aggressively, anticipating further rupee strength in the short term.

Key Highlights

- Indian Rupee appreciated by 19 paise to close at 88.2750 per US Dollar on September 12, 2025
- Previous close was 88.4425, marking a modest recovery amid global currency volatility
- Gains driven by FII inflows, stable crude prices, and a softer dollar index
- RBI intervention and strong domestic equity performance supported rupee strength
- US Fed rate cut expectations and CPI data remain key global triggers
- Rupee likely to trade within 86.5–88.5 band in near term, barring fresh geopolitical shocks

Looking Ahead

While the rupee’s recovery is encouraging, analysts caution that global uncertainties—especially around US trade policy and inflation—could still pose risks. The RBI’s proactive stance and India’s strong macro fundamentals offer a cushion, but sustained appreciation will depend on continued capital inflows and global stability. For now, the rupee’s climb to 88.2750 offers a breather to importers and signals resilience in the face of external headwinds.

Sources: The Economic Times, The Hindu Business Markets, Business Standard
 

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