The Indian rupee collapses against the dollar 🔥

The Indian rupee (INR) starts October 2025 almost touching historical lows against the dollar. The USD/INR is around 88.69, and each rupee is worth just 0.01128 dollars. A concerning fall. 📉

What's happening? Two things. The U.S. raised tariffs on India and foreign investors are fleeing the Indian market. A perfect storm. 🌪️

In August, Washington punished New Delhi. Tariffs jumped from 25% to 50%. The reason seems clear: India continues to buy Russian oil. Americans say that money finances the war in Ukraine. Indian exporters suffer the consequences.

The capital flight is brutal. Foreign investors sold shares for Rs. 8,312.66 crores on Friday. So far, it's Rs. 94,569.6 crores in July and August. They had previously invested Rs. 24,011.43 crores between March and June. A radical turnaround. 📊

The strange thing is that the Indian GDP shines. It grew by 7.8% in the second quarter, better than the 7.4% in the first. Experts were only expecting 6.6%. It is somewhat bewildering to see such a strong economy with such a weak currency. 🚀

Modi and Xi met this weekend at the SCO summit. It seems that relations between India and China might improve. Modi spoke of "mutual respect" and "trust," according to Reuters. We will see if this helps.

The dollar continues to gain ground 📈

The USD/INR touches historic highs near 88.69. The trend is bullish. The pair remains above the 20-day Moving Average (87.60).

The 14-day RSI exceeds 60.00. It seems there is buying strength. The 20-day moving average could act as support. To the upside, the pair is in uncharted territory. The 89.00 level will be key. 🔮

The dollar index falls for five consecutive days due to the Labor Day holiday in the U.S. It is trading near 97.70, its monthly low. 🌐

The greenback is losing strength against the labor data that will arrive this week. The CME FedWatch tool shows an 87.6% probability of a rate cut this month. The markets are already almost taking it for granted. 🌕