Rupee Edges Lower to 88.16 Amid India-U.S. Trade Talks; Markets Watch CPI, Fed Rate Outlook

The Indian rupee weakened by 5 paise to ₹88.16 against the U.S. dollar in early trade on Thursday, September 11, 2025, as investors closely monitor developments in the ongoing trade negotiations between India and the United States. Despite the slight decline, forex traders noted that the rupee held firm, buoyed by optimism around a possible trade deal.

At the interbank foreign exchange market, the rupee opened at ₹88.11 before slipping to ₹88.16, marking a modest fall from its previous close. On Wednesday, September 10, the rupee had rebounded by 4 paise from record lows to settle at ₹88.11.

Market analysts expect the rupee to remain confined within a narrow range in the near term, trading between ₹87.50 and ₹88.40. “For today, we expect the range to be between ₹87.80 and ₹88.30,” Finrex Treasury Advisors LLP noted in a research update, citing sentiment driven by trade talks, the upcoming Consumer Price Index (CPI) release, and expectations of a larger Federal Reserve rate cut.

The rupee has struggled to breach ₹88.20 on the higher side and ₹87.95 on the lower end over the past few sessions. The Reserve Bank of India is reportedly intervening by selling dollars quietly around the ₹88.20 mark to stabilize fluctuations.

Meanwhile, the U.S. dollar index—which measures the greenback’s strength against a basket of six major currencies—edged up by 0.05% to 97.82. Global oil prices also softened, with Brent crude futures down 0.10% to $67.42 per barrel.

Domestic equities mirrored cautious optimism, with the BSE Sensex climbing 153.82 points to 81,578.97, and the Nifty rising 34.15 points to 25,007.25 in early trading. However, foreign institutional investors (FIIs) remained net sellers, offloading equities worth ₹115.69 crore on Wednesday.

On the diplomatic front, Prime Minister Narendra Modi reaffirmed India’s commitment to resolving trade issues with the U.S., describing the two nations as “natural partners.” His remarks came in response to U.S. President Donald Trump’s comments about addressing “trade barriers,” amid recent tensions following Trump’s decision to double tariffs on Indian imports.

The exchanges between the two leaders, particularly on social media, are viewed as attempts to reset strained ties and expedite a bilateral agreement. With CPI data and global monetary policy shifts on the horizon, market participants are bracing for increased volatility while watching closely for developments that could shape the direction of the rupee and broader financial markets.