The rupee is falling, an intervention is likely to ease pressure from weak equities and Asian currencies

The Indian rupee closed modestly weaker on Tuesday, pressured by a decline in local stocks and regional currencies, while central bank intervention likely limited the currency’s decline.The rupee fell to 90.19 per dollar, slightly weaker than the close of 90.1625 in the previous session.

Asian currencies fell between 0.1% and 0.8%, while India’s stock indices, the BSE Sensex and the Nifty 50, fell 0.2% and 0.3% respectively, lagging most regional peers.The delay in the inclusion of Indian bonds in a global flagship index also hurt the rupee, but pressure on multiple fronts was blunted by interventions in dollar sales by the Reserve Bank of India in the non-deliverable forward and local spot markets.

Despite the headwinds, some analysts say a modest recovery is in store for the rupee as seasonality turns positive.

Analysts at HSBC said they “tactically favor the INR in 1Q26, due to a seasonal narrowing of the trade deficit, and assuming progress in US-India trade negotiations.”

The company expects the INR to rise to 88 per dollar by the end of March 2026 and, as a result, decline towards 90 by the end of the year. Progress in US-India trade negotiations remains critical for the currency.

Washington’s ambassador to New Delhi said on Monday that the two countries will hold a trade call on Tuesday, although a new dose of uncertainty was injected by President Trump’s announcement of a 25% trade tariff on any country doing business with Iran.

According to the Indian Ministry of Commerce, India’s total bilateral trade with Iran in the first ten months of 2025 was $1.34 billion.

Meanwhile, market participants are also awaiting the release of key US inflation data later today, while keeping their eyes peeled for developments surrounding the ongoing threats to the independence of the US Federal Reserve.