The Indian Rupee (INR) continued its downward trend on Friday, marking the seventh consecutive session of depreciation against the US Dollar (USD). The USD/INR pair was last seen trading at 86.60, reflecting a 0.25% gain for the greenback on the day, with intraday movement ranging between 86.42 to 86.62.
With the pair nearing a fresh monthly high of 86.75, investor sentiment remains cautious due to external pressures and capital outflows, as per news reports.
One of the primary reasons behind the weakening rupee is sustained selling by Foreign Institutional Investors (FIIs). So far in July, FIIs have sold ₹28,528.70 crore worth of Indian equities, including ₹2,133.69 crore on Thursday alone.
A combination of moderate Q1 earnings, lack of policy triggers, and delays in US-India tariff negotiations are prompting overseas investors to pare exposure to Indian markets.
Adding to the pressure is the broad-based strength in the US Dollar. The greenback has been buoyed by strong private sector growth in the US, bolstering expectations of a prolonged higher interest rate environment.
Investors globally are also awaiting the outcome of the upcoming US Federal Reserve monetary policy meeting, as well as the August 1 tariff deadline, both of which are likely to inject further volatility into currency markets.
On the domestic front, India signed a Free Trade Agreement (FTA) with the United Kingdom on Thursday. The deal, announced by Commerce and Industry Minister Piyush Goyal, aims to reduce trade barriers on over 95% of agricultural and processed food products, as well as textiles.
While this move could open new avenues for Indian exporters and benefit domestic farmers, its positive effects on the rupee may take longer to materialise.
Read More: India and UK Signed FTA: What's Getting Cheaper for Both Nations?
The USD/INR trajectory remains skewed toward further rupee weakness in the near term as external headwinds and domestic equity sell offs persist. While structural reforms like the UK FTA may support the rupee in the long run, short term movements will likely be dictated by global capital flows and the upcoming Fed policy decision.
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Published on: Jul 25, 2025, 3:00 PM IST
Neha Dubey
Neha Dubey is a Content Analyst with 3 years of experience in financial journalism, having written for a leading newswire agency and multiple newspapers. At Angel One, she creates daily content on finance and the economy. Neha holds a degree in Economics and a Master’s in Journalism.
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