The recent developments in the USD/INR exchange rate indicate a cautious, slightly declining tendency, especially in the run-up to the trade talks between the USA and China. On June 6, 2025, the rate dropped to around 85.7890 INR per USD, a decrease of 0.08% compared to the previous session. Over the last month, the Indian Rupee has fallen by approximately 1.15% against the US Dollar.
Market Hesitation Due to Trade Uncertainties
This market hesitation is predominantly caused by uncertainties regarding the trade relationships between the two largest economies in the world. Investors are increasingly turning to dollar investments amidst optimism about the continued trade flow between the USA and China, which is weighing on the Rupee. In India, monetary policy expectations are influencing market development: Consumer price inflation fell in April to a nearly six-year low, raising speculation that the Reserve Bank of India (RBI) might implement further interest rate cuts.
Monetary Policy and Economic Impacts
The RBI has introduced several interest rate cuts and liquidity support measures in the past to support economic growth and ease financing conditions. This development is particularly significant for investors, as exchange rate fluctuations can have direct impacts on investments in India—specifically concerning imports, exports, and capital flows. The upcoming trade talks could bring stability or introduce new uncertainties.
In summary, the USD/INR rate is currently moving sideways to slightly declining. Positive trade signals between the USA and China are temporarily strengthening the US Dollar, while low inflation in India is raising expectations for further interest rate cuts by the RBI. Simultaneously, rising energy prices are leading to dollar outflows from India.