The Indian Rupee (INR) is facing significant pressure against the US Dollar (USD) following a surprise 50-basis-point rate cut by the Reserve Bank of India (RBI) in June 2025. This marks the third consecutive rate reduction since February, bringing interest rates to their lowest since August 2022, as the central bank aims to stimulate economic growth amidst global uncertainties.
According to recent market analysis, the INR appreciated slightly to close at 85.64 against the USD after volatile trading sessions, up from 85.80 the previous day. However, experts predict further weakening, with forecasts from financial institutions like UBS suggesting the USD/INR pair could reach 85 or higher as the RBI continues its dovish stance.
The RBI's decision to inject Rs 2.5 lakh crore in liquidity alongside the rate cut is seen as a bold move to support growth. Analysts note that while this may provide short-term relief to domestic markets, it could undermine the Rupee's strength against a resilient US Dollar, fueled by strong economic data and institutional demand in the US.
Market sentiment remains mixed, with some traders cheering the RBI's pivot to a more accommodative policy, while others express concerns over potential inflationary pressures and currency depreciation. The non-deliverable forwards market has also shown increased USD demand, adding further strain on the INR.
Looking ahead, the USD/INR forecast for the remainder of 2025 suggests a narrow trading range with slight depreciation expected. Experts advise businesses and investors involved in international transactions to hedge against potential volatility in the forex market.
For the latest updates on currency trends and expert analysis, stay tuned as the situation evolves with the RBI's monetary policy and global economic developments influencing the Indian Rupee's trajectory.
Maria Lourdes
