The Indian rupee finds support after the Reserve Bank of India maintains its benchmark rate at 5.25%, supported by strong capital inflows and cautious global outlook, though external risks cap its gains.
The Indian rupee has found some breathing room after the Reserve Bank of India left its benchmark repo rate unchanged at 5.25% and kept a neutral policy stance, a move that helped ease pressure on USD/INR towards the 95.10 area. FXStreet reported that the central bank described recent inflation pressures as largely driven by supply factors rather than broad demand, while also raising its growth outlook and trimming its medium-term inflation projection.
That pause marked a fourth straight meeting without a change in borrowing costs, underscoring the RBI’s preference for flexibility as global conditions remain unsettled. Business Standard said the steady rate has kept monthly payments unchanged for borrowers with floating-rate home loans, while other market reports noted that the decision followed earlier reductions in 2025 and was intended to balance inflation risks against slower global growth.
Analysts also see support for the rupee from stronger capital inflows. OCBC said India has attracted nearly $41 billion through recent regulatory measures, including foreign currency deposits, overseas borrowing and swap facilities, which could leave the country with a healthier balance of payments and additional liquidity in the banking system. That, together with lower crude prices and a firmer foreign exchange reserve position, has given the currency a near-term cushion.
Even so, the upside for the rupee remains limited by external risks. Commerzbank said elevated US Treasury yields and uncertainty around oil markets, particularly geopolitical tensions affecting West Asia, could prevent a sustained move lower in USD/INR. The bank also noted that the RBI’s latest inflation and growth projections signal confidence in domestic demand, but not enough to rule out renewed pressure from abroad.
In the short term, both banks expect the dollar-rupee pair to remain range-bound around the 95 level. OCBC pointed to support near 95.00 and 94.70/74, with resistance around 95.40 and 95.70, while Commerzbank said the broader picture still leaves the rupee one of Asia’s weaker performers this year despite the current respite.
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