Rupee Trades Flat at 85.92 Amid Weaker Dollar, Trade Talk Uncertainty

Mumbai, July 15, 2025 – The Indian rupee remained steady in early trade on Tuesday, holding at 85.92 per US dollar, unchanged from its previous close, amid a weakening dollar overseas and softening global crude oil prices.

Brent Crude Softens, Dollar Index Eases

At the interbank foreign exchange,  the rupee began trading at 85.97 and then slowly increased to 85.92. Foreign institutional investor (FII) withdrawals and continued trade uncertainty between the US and India limited advances for the domestic unit, even if the overall trend was supported by a 0.04% drop in the dollar index to 98.04 and a 0.42% drop in Brent crude to USD 68.92 per barrel.

The Reserve Bank of India reportedly used dollar sales to intervene in the foreign exchange market on Monday, but traders are keenly monitoring whether this pattern holds true.

Inflation Data Signals Rate Cut Possibility

India’s consumer price inflation (CPI) eased to a six-year low of 2.1% in June, largely due to falling prices of vegetables and other food items amid a favourable monsoon. This drop brings inflation well within the RBI’s comfort zone and could pave the way for a potential rate cut.

Additionally, wholesale price inflation (WPI) turned negative for the first time in 19 months, declining by 0.13% in June, as prices of food articles and fuel dropped further and manufacturing costs eased.

Geopolitical and Trade Headwinds Persist

Market sentiment was also affected by geopolitical developments. Brent crude prices fluctuated amid concerns surrounding US President Donald Trump’s 50-day deadline to Russia to end the war in Ukraine or face sanctions, which could affect Indian crude imports.

Meanwhile, an Indian commerce ministry delegation is currently in Washington for a four-day round of bilateral trade talks, scheduled to conclude on Thursday. The outcome of these negotiations is expected to play a crucial role in shaping market sentiment.

Equities Rebound, FIIs Remain Cautious

On the equities front, both benchmarks saw early gains. The BSE Sensex rose 203.95 points to 82,457.41, while the NSE Nifty climbed 68.85 points to 25,151.15.

However, FIIs were net sellers in the equity market, offloading shares worth ₹1,614.32 crore on Monday, according to exchange data.

Market Outlook

While favourable inflation data and easing crude oil prices offer some support to the rupee, persistent FII outflows and trade uncertainties continue to act as headwinds in the near term.

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