USD/INR: Indian Rupee Rebounds from One-Month Low on May 23 Amid Market Optimism

As of May 23, 2025, the US Dollar/Indian Rupee (USD/INR) spot rate was at 85.18 at 3:55 PM, marking a sharp intraday decline of 0.81 points or 0.94%. This pullback reflects improving sentiment for the Indian rupee, supported by a recovery in local equities and weakening momentum in the US dollar.

Today’s trading range spans from 85.18 to 86.04, suggesting volatility as traders respond to evolving domestic and global cues. Despite the dip, the broader 52-week range of 82.95 to 87.99 highlights the rupee’s vulnerability to external pressures, including geopolitical risks and interest rate differentials.

Indian Rupee Regains Footing as Risk Appetite Improves

The Indian rupee (INR) witnessed a modest yet notable recovery today, climbing off its recent one-month low as investor sentiment improved in domestic and regional markets. The recovery comes after the rupee had tested the 86.10 mark against the US dollar, weighed down by risk aversion and global uncertainties.

This turnaround was mirrored in the equity markets, where the benchmark Nifty index advanced by around 0.8%, buoyed by a rebound in Asian stocks and easing concerns about near-term inflation and rate hikes. The firm performance of equities often lends support to the rupee, as it attracts foreign portfolio flows.

Global Factors Offer Tailwind

The dollar index, which tracks the greenback against a basket of six major currencies, slipped back near a two-week low of 99.50. This dip reflects ongoing market concerns about the US fiscal outlook, despite recent political developments. While the US House Republicans narrowly passed a key agenda bill backed by former President Trump, the broader economic implications remain unclear, and investor caution persists.

The weakening dollar has provided some relief to emerging market currencies like the INR, which have been under pressure in recent sessions due to external headwinds, including geopolitical uncertainties, rising oil prices, and diverging monetary policies across global central banks.

USD/INR Futures Indicate Mild Bearish Sentiment

On the National Stock Exchange (NSE), USD/INR futures were down 0.33% for the day, trading at 85.70. This decline reflects a moderation in demand for the dollar and a slight shift in sentiment as traders reassess risk following encouraging domestic equity performance and softening global dollar strength.

Still, market watchers caution that this rebound may be short-lived unless supported by sustained foreign inflows, a stable interest rate outlook, and clarity on global fiscal policies. The rupee remains vulnerable to any shocks in crude prices or unexpected central bank moves, especially from the US Federal Reserve.

Read More: Trump Tells Apple Not to Expand Production in India Amid Trade Tensions: Report.

Conclusion

While today’s gains in the rupee are welcome, the broader outlook remains cautious. Traders and investors will be closely watching upcoming economic data releases, policy signals from the Reserve Bank of India (RBI), and geopolitical developments. As the INR continues to navigate external uncertainties, its near-term trajectory may hinge on the interplay between domestic stability and global risk sentiment.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.