Indian rupee to open steady but outlook fragile after fall past 90

MUMBAI: The Indian rupee is expected to open flat-to-slightly weaker on Monday, with traders expecting the currency to trade with a slight depreciation bias after falling past the 90 per dollar mark last week.

The 1-month non-deliverable forward indicated the rupee will open in the 89.99-90.02 range versus the U.S. dollar, having settled at 89.98 on Friday.

The South Asian currency has been steeped in a downtrend over the last few weeks, pressured by dwindling dollar flows into the economy, which alongside a limbo in U.S.-India trade negotiations, contributed to pushing it to an all-time low of 90.42 last week.

Traders reckon that the pressure on the rupee is expected to linger unless there is a breakthrough in trade talks or portfolio inflows pick up. Foreign investors have net sold $1.3 billion of Indian stocks so far in December, parking the year-to-date outflow tally at $17.7 billion.

MUFG expects the rupee to decline to the 90.80 level by the July-September quarter in 2026, assuming a trade deal is struck early next year, bringing tariffs down to 25% from 50%.

“If a trade deal between US and India is not eventually struck, however, we may well see USD/INR rise towards the 92 levels,” the firm said in a note.

Elsewhere, the focus this week is on the U.S. Federal Reserve’s final policy meeting for 2025 on Wednesday, where the central bank is widely expected to cut rates by 25 basis points.

On Monday, the dollar index was a tad lower while broader FX markets were largely subdued heading into a week crammed with central bank meetings across Australia, Switzerland and Canada.