On Monday, July 14, 2025, the Indian rupee began the day with a weak performance. In the interbank foreign exchange market, the rupee opened at 86.02 against the dollar, down 17 paise. Within the initial hours, it further declined, losing a total of 21 paise compared to the previous session. The rupee had closed at 85.80 on Friday, while today's trading saw it trading below 85.96.
Dollar's Strength Driving the Decline
The dollar index, which represents the position of the US dollar against six major currencies, also rose by 0.08 percent to reach 97.93. This indicates an increased demand for the dollar worldwide, putting pressure on other currencies. Foreign exchange dealers attribute this to the new tariff warnings from Trump, which have heightened fears regarding global trade, leading investors to view the dollar as a safe haven.
Trump's Threats Cause Unease in the Forex Market
On July 12, US President Donald Trump publicly threatened Ursula von der Leyen, the President of the European Union, and Claudia Sheinbaum, the new President of Mexico. Trump explicitly stated that if the two countries did not change their policies to align with US trade interests before August 1, 30 percent tariffs would be imposed on their products. This announcement has increased instability in international currency markets.
FII Selling Adds to the Pressure
Last Friday, Foreign Institutional Investors (FIIs) made net sales of ₹5,104.22 crore in the Indian stock market. This heavy outflow is considered a major reason for the rupee's weakness. When foreign investors withdraw funds from the Indian market, they repatriate the funds in dollars, increasing the demand for dollars and putting pressure on the rupee.
Sluggishness in the Domestic Stock Market as Well
The stock market also saw a decline in early trading. The BSE Sensex fell by 295.37 points to 82,205.10 in the morning session. Simultaneously, the NSE Nifty 50 index was trading at 25,078.45, down 71.4 points. Market analysts say that the market is unstable due to Trump's tariff threats and the outflow of foreign funds.
What's Next in the Forex Market?
While no formal order has been issued by the US regarding Trump's statements, the market is already in a state of caution. Foreign exchange experts say that the demand for the dollar will remain high until a clear policy is established by the US, making it less likely that the rupee's situation will improve.
Increased Dollar Demand from Banks and Importers
Market sources say that the demand for dollars has also increased from Indian importers and some private banks. Companies that engage in international dealings, in particular, require more dollars. This additional demand has also put pressure on the rupee.
Rupee Near Yearly Lows
Considering the current situation of the rupee, it can be said that it has reached one of its weakest levels of 2025. Although the Reserve Bank has not yet intervened directly, it may take steps in the coming days if the situation worsens.
Impact on Gold and Silver Prices
The strength of the dollar was also seen impacting the prices of gold and silver. Investors are turning to these safe-haven assets due to inflation and global tensions. Compared to Friday, gold contracts saw a slight increase on Monday, while silver also opened with strength.
Implications for the Indian Economy
This decline in the rupee is considered a warning to the Indian market about how global events can impact the domestic currency and market. Trump's tariff policies, the strength of the dollar, crude oil prices, and the stance of FIIs – all these factors could affect the rupee's movement over the next few weeks.
