The Indian rupee lost some of its value on May 20, 2025 mainly due to foreign banks buying dollar. By the end of day Rupee closed at 85.6350 against a dollar.
The stock market also dropped. The main stock indexes fell by nearly 1% each. When the stock market goes down, some foreign investors take their money out. This creates more demand for dollars and adds pressure on the rupee. Traders said that some of this demand came from foreign banks that might be handling withdrawals for global clients.
Bond yields in India also dipped. The yield on the 10-year government bond fell slightly, showing that investors were being cautious.
According to some financial experts, the rupee may settle between 84 and 86 in the coming days. One analyst from DBS said this is normal behavior. The rupee usually returns to a balance after big ups or downs.
Earlier this year, in February, the rupee hit its lowest level ever at 87.95 per dollar. But since then, it has slowly recovered. The comeback wasn’t smooth, though. There were ups and downs, especially when there were sudden changes in U.S. trade policies or tensions between India and Pakistan.
Now, the rupee seems a little more stable. A key measure called “implied volatility,” which shows how uncertain people are about the future, has dropped to around 5%. Just last week, when tensions were higher, it had gone above 7%.
Traders believe that what happens next will depend a lot on trade talks. If major countries like the U.S. and China make progress on trade agreements, markets may calm down. If not, more ups and downs could follow.
Meanwhile, the U.S. dollar is facing its own problems. There are worries about how the U.S. is handling its government finances. Some investors are also beginning to doubt if the U.S. is still the safest place to invest. Because of this, the dollar has been under pressure globally.
According to recent data, many investors are betting against the dollar. In fact, they have shorted the dollar by $17.32 billion. That’s close to the most negative position they’ve had since July 2023. On Tuesday, the dollar index, which shows the value of the dollar compared to other major currencies, was down about 0.3% at 100.1.
All of this shows how sensitive a market is – even if there is a slight change in China or the U.S., it can affect India too. But for now, experts think that the rupee will stay in a certain range. Until and unless something unexpected happens. Like a regional or geographical challenge that can appear in front of a country.
