By Jaspreet Kalra
MUMBAI (Reuters) -The Indian rupee kicked off the week on a muted note, shuffling in a narrow band as worries over fresh trade tensions between the world’s two largest economies dented risk sentiment while expectations of central bank intervention limited losses.
The rupee was at 88.7450 per U.S. dollar as of 10:30 a.m. IST, down slightly from its close at 88.6850 in the previous session.
A fresh round of tariff threats against China from the U.S. dealt a jolt to global risk appetite with stocks in Asia trading in the red even as U.S. President Donald Trump struck a conciliatory tone after threatening Chinese exports with a 100% levy starting November 1.
MSCI’s gauge of Asian shares excluding Japan was down 2% while India’s equity benchmarks, the Nifty 50 and BSE Sensex, fell 0.3% each. Gold, meanwhile, claimed yet another record high and was last up nearly 1%.
Persistent outflows from local stocks have been a sore spot for the rupee but frequent central bank interventions have helped stave off the pressure. Traders reckon that the central bank is likely to keep defending the rupee near the record low of 88.80.
Foreign investors have been net sellers of Indian equities since July. Concerns about muted earnings growth, relatively higher valuations versus emerging market peers and tariff uncertainties have weighed on local stocks, analysts at BofA Global Research said in a note.
India has seen the highest foreign investor outflows year-to-date in 2025 at $18 billion, followed by South Africa at $11 billion and Malaysia at $$4 billion, the note added. China and Taiwan, meanwhile, have seen inflows of $27 billion and $7 billion, respectively.
Flows are unlikely to revive in the absence of a U.S.-India trade deal, which, if and when it materialises, could spark a 1%-1.5% rally in the rupee, a trader at a state-run bank said.
(Reporting by Jaspreet Kalra; Editing by Rashmi Aich and Mrigank Dhaniwala)
