The Indian rupee opened flat against the dollar on Monday, as traders remained cautious amid growing global trade tensions. Focus has now shifted toward the Reserve Bank of India’s policy decision later this week, as expectations for easing measures grow stronger.
The rupee was last at 83.43 against the dollar, barely changed from its previous close. Last week, the currency strengthened 0.3%, marking its third consecutive weekly gain. The improvement was driven by a softer dollar, as signs of a potential U.S. economic slowdown weighed on investor sentiment.
However, the dollar made a modest recovery on Friday following hawkish comments from the Federal Reserve and better-than-expected U.S. nonfarm payrolls data. The dollar index moved up to 104.3, reflecting continued volatility driven by global uncertainty.
Investors are increasingly wary of the growing trade rift between the U.S. and China, especially after China unveiled 34% tariffs on all U.S. imports. These developments have raised fears of a renewed trade war, which could significantly impact global economic growth.
In the bond market, traders are looking ahead to the RBI’s monetary policy meeting scheduled for Tuesday. The central bank is widely expected to maintain its key interest rate but may hint at easing measures in the near future. The yield on India’s benchmark 10-year bond dropped sharply last week, falling by 12 basis points to 6.4630%—its biggest weekly decline in over a year.
The market will also be watching U.S. inflation data due later in the week for further cues on the dollar and interest rate outlook. For the rupee, analysts suggest a near-term trading range of 83.30 to 83.60, as the currency navigates both domestic policy shifts and global macroeconomic risks.