The Indian rupee had a rough ride this week, slipping noticeably against the US dollar. On May 9, it closed at 85.37—down from 84.56 just a week earlier on May 2. That’s a sharp decline of 81 paise in a matter of days, signaling some underlying stress in the currency markets.
What’s interesting is that this fall came at a time when global cues were generally positive. With encouraging developments like the US-UK trade talks and ECB rate cuts creating a more supportive global environment, one would expect emerging market currencies like the rupee to hold steady, if not strengthen. But that wasn’t the case.
Instead, the rupee bore the brunt of local factors—most notably, geopolitical tension with Pakistan. Such uncertainty tends to trigger a flight to safety, and that often means investors moving towards the US dollar, which in turn pressures the rupee.
Moreover, importers may have rushed to hedge their positions amid the uncertainty, pushing up demand for the dollar. Add to that a cautious tone in the equity markets, and you have the perfect recipe for a rupee dip.
For now, currency traders and investors will be watching closely. Any signs of easing tensions could help the rupee bounce back, but if geopolitical risks linger, we might see further downward pressure in the near term.