Indian currency, the rupee, starts the day trading at 87.17 per US dollar, reflecting a weak trend in Asian currencies.
Rupee Volatility Against the Dollar in August 2025
The Indian rupee has been experiencing volatility against the US dollar, with its value fluctuating throughout August 2025. This volatility can be attributed to a combination of factors, including the strength of the US dollar, renewed trade tensions between the US and India, persistent import demand, and intermittent foreign capital outflows.
On August 20, the rupee began the day weaker against the US dollar, marking a decline from its three-week high of 86.96 per dollar, which it had reached on August 19. This decline mirrored broader losses in Asian currencies during the morning session. The Dollar Index, a measure of the greenback's strength against a basket of currencies, rose for a third consecutive session, standing at 98.373 on August 20.
The rupee's susceptibility to global risk events and dollar strength is highlighted by its current value of 87.17 a dollar. A stronger dollar typically weighs on emerging market currencies, including the rupee, by prompting capital outflows and raising import costs.
The ongoing U.S.–India trade tensions, with tariff escalations, have also played a significant role in the rupee's performance. The synchronized weakness across Asia reflects heightened risk aversion ahead of Federal Reserve Chair Jerome Powell's speech on August 22, where he is expected to provide cues on the trajectory of US interest rates.
However, the rupee may find some relief in the near term due to the Fed's more dovish outlook signaled at the Jackson Hole symposium. On August 22, Powell hinted at a possible rate cut in September due to rising job market risks, which caused the US yields to fall and the USD index to drop. This could ease some downward pressure on the rupee.
Despite this, ongoing trade tariff issues between the US and India continue to exert upward pressure on the USD/INR, potentially limiting the rupee's appreciation despite Fed easing prospects.
Currency traders attributed the dip in the USD-INR pairing to profit-taking and positioning adjustments before the Jackson Hole symposium. Despite India's relatively stable macro fundamentals, speculative traders are likely to remain cautious until more clarity emerges from the Jackson Hole symposium on the Fed’s monetary path.
Analysts expect the rupee to remain volatile in the near term, with global central bank commentary and risk sentiment playing a decisive role. Potential support levels for the rupee are seen at 87.20-87.30, while resistance is seen at 86.80.
[1] Source: [Article 1] [2] Source: [Article 2] [3] Source: [Article 3] (If applicable)
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