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Rupee Ends Nine-Day Rally, Closes at 85.75 vs USD Amid Importer Hedging, Weak Asian Peers

Dollar inflows moderate as regional currencies weaken and importers hedge; MUFG revises rupee outlook to ‘neutral’ with cautious tone for rest of 2025.

March 25, 2025: The Indian rupee snapped its nine-session winning streak on Tuesday, settling at 85.7550 against the US dollar, a 0.14% drop from the previous close. The correction comes after the rupee touched its year-to-date high of 85.49 on Monday.

Also Read: Sensex Ends Flat; ₹3 Lakh Crore Investor Wealth Wiped Out in a Single Day

Several factors contributed to the pullback:

  • Importers stepped in to hedge dollar liabilities at favorable levels.
  • Dollar inflows slowed, despite earlier support from overseas investor inflows and corporate repatriations.
  • Asian peers also slipped, putting pressure on the rupee.

Despite its nearly 2% gain for the month, analysts warn that the rupee faces headwinds from global uncertainties, especially the impact of U.S. tariffs, inflation risks, and a possible RBI intervention to shore up foreign exchange reserves.

Also Read: Gold Prices Dip After Record Highs Amid Dollar Strength, Low Demand: Experts Highlight Crucial MCX Levels

MUFG Revises Outlook:

In a fresh report, MUFG has changed its rupee view from ‘cautious’ to ‘neutral’, now projecting the currency to close 2025 at 87.50, stronger than its earlier forecast of 88.50. However, the firm warned that the rupee remains vulnerable to downside risks, including:

Also Read: Nifty 50 Turns Green in 2025: Will the Indian Stock Market Rally Sustain?

  • Underpricing of India’s tariff exposure
  • Weak domestic growth outlook
  • Sticky inflation expectations
  • Persistent weakness in broader Asian currency markets

On the day, the US dollar index hovered near 104.3, while most Asian currencies dropped between 0.1% and 0.3%.

Meanwhile, the 1-year USD/INR forward premium rose sharply, with the implied yield hitting a one-month high of 2.23%, following the RBI’s $10 billion FX swap auction results.

Market participants are now closely watching the upcoming U.S. consumer confidence data and remarks from Federal Reserve officials, which could further influence currency movement.


🏷️ Tags:

Indian Rupee, USDINR, Forex Market, RBI, Importers, MUFG, Currency Outlook, Inflation, Tariffs, Dollar Index, Asian Currencies, RBI FX Swap, Financial News, Global Markets, India Economy

Mahendra Mohan

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