Topic 3: RUPEE: STEADY SHIMMER

In October 2025, the Indian Rupee (INR) remained largely stable but exhibited a slight weakening trend against the U.S. Dollar amid mixed global and domestic developments. Throughout the month, the rupee traded in a narrow range between 87.74 and 88.86 per U.S. dollar, reflecting resilience despite global dollar strength and fluctuating capital flows. The currency ended the month near 88.72 per dollar, marking a modest depreciation of about 0.10% compared to September. This marginal decline underscored the rupee’s relative stability even as emerging market currencies broadly weakened under a strong dollar environment.
During the month, the highest exchange rate was recorded around ₹88.87 per U.S. dollar on October 9, indicating moments of pressure linked to global risk aversion and foreign portfolio outflows. Conversely, the rupee touched its monthly low near ₹87.74 on October 22–23, when a brief bout of strength emerged following Reserve Bank of India (RBI) intervention and a pullback in global crude prices. Despite minor intraday and weekly fluctuations, the currency remained within a tight range, demonstrating that active market management and strong fundamentals helped contain volatility.
The rupee’s movement was influenced by a mix of domestic and international factors. Globally, the U.S. Federal Reserve maintained a cautious stance on interest rate cuts, signalling patience despite signs of slowing economic growth. This policy approach kept the dollar relatively firm, reducing the appeal of emerging market currencies. Additionally, lingering trade deficit concerns and uneven foreign capital flows exerted intermittent pressure on the rupee.
A major event that shaped currency dynamics was the RBI’s active intervention in the forex market. On October 15, the central bank sold U.S. dollars aggressively to curb speculative demand, leading to the rupee’s sharpest single-day gain—about 0.8%—in nearly four months. This move highlighted the RBI’s commitment to managing volatility rather than defending any fixed level. Such timely interventions reassured market participants and prevented excessive depreciation pressures. India’s macroeconomic fundamentals also provided a strong buffer. With GDP growth of 7.8% in Q1 FY26, inflation remaining within the central bank’s comfort range, and foreign exchange reserves exceeding $700 billion, India’s economic position remained sound. The current account deficit, contained at around 1% of GDP, further supported currency stability. These factors collectively enhanced investor confidence and limited speculative pressures on the rupee.
In summary, October 2025 was a month of cautious stability for the Indian rupee. The currency’s slight depreciation reflected external pressures from a firm U.S. dollar and global uncertainty, but strong domestic fundamentals, proactive RBI interventions, and a contained current account deficit helped prevent any significant weakness. With resilient macroeconomic indicators and ongoing policy initiatives, the rupee remained fundamentally stable and well-positioned to withstand global volatility heading into the final quarter of 2025.



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