The Indian rupee closed 14 paise weaker at 86.29 against the US dollar on Monday, marking its lowest closing level since June 23. The decline follows Friday's close of 86.15 and reflects growing pressure from global and domestic factors.
The rupee's weakness was driven by a rebound in the US dollar and lingering uncertainty around Indo-US trade negotiations, according to Anil Bhansali, head of treasury at Finrex Treasury Advisors LLP. Talks held last week between the two nations failed to resolve key disputes, particularly in agriculture and automobile sectors, keeping market sentiment cautious.
Bhansali pointed to expectations of rate cuts in India, following a sharp drop in inflation to 2.1%, a six-year low. The prospect of monetary easing and excess liquidity in the system are contributing to the rupee's softness, alongside disappointing high-frequency economic data.
Globally, attention is focused on upcoming remarks from US Federal Reserve Chair Jerome Powell, especially after criticism from President Donald Trump over interest rate policy. Meanwhile, the European Union is preparing contingency plans in case of a breakdown in trade talks with the US, adding to the cautious tone in currency markets.
The rupee's performance reflects broader concerns about slowing growth and policy uncertainty, both domestically and abroad.
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