Mumbai: Most of the recent market focus has been on the rupee’s modest gains against the dollar. Yet, a closer inspection of currency trends reveals a broader bout of weakness: the Indian currency has slid against a basket of non-dollar counterparts, notably the euro and the pound, complicating the picture for policymakers and market participants.
Abhishek Goenka, chief executive of IFA Global, highlighted the rupee’s decoupling from the greenback’s trajectory. “A weaker rupee against non-dollar currencies is positive for exporters, provided they are not overhedged,” he said, noting that euro and UK pound have touched new highs against the rupee. “It’s a great time for those receiving inward remittances in these currencies,” he added, suggesting risk reversals as a hedging strategy for exporters.He linked the dollar’s softening to a waning geopolitical hegemony: “The central role that the US used to play in global geopolitics allowed it to enjoy exceptionalism. That exceptionalism is now under serious threat.”
Forex consultant KN Dey saw the dollar’s retreat as a result of the Trump administration’s delay in implementing new tariffs. He pointed to the euro’s ascent to 1.15—significant, as it constitutes 57% of the dollar index. While this has bolstered India’s foreign exchange reserves, he cautioned that “it would also make travel to Europe and education very expensive.” Dey added that European governments, grappling with economic weakness, are unlikely to tolerate prolonged currency appreciation and may act to curb it.
Riya Singh of Emkay Global noted that the dollar index (DXY) had fallen from 110.17 to below 98, a slide that has buoyed non-dollar currencies. “As for de-dollarisation, it appears unlikely in the near term,” she said. “The recent decline in the U.S. dollar seems more driven by policy uncertainties under the Trump-era narrative, economic slowdown concerns, and expectations of 80–100 basis points of rate cuts by the Fed year.” While acknowledging some diversification into gold, Singh argued that “a full-scale shift away from the dollar remains both costly and largely unproven. The USD still accounts for the majority of global forex reserves, trade settlements, and SWIFT transactions.”
Harsh Madhusudan Gupta of Ionic Asset took expects the rupee to gain both in real and nominal terms, though he is sceptical of de-dollarisation. “Given low inflation differences this time compared to the first decade of the millennium (which is when the dollar was last in a down cycle), INR could noticeably appreciate against the USD in nominal terms as well. Against other developed market currencies also, the rupee should see appreciation, though less muted.This broad real rupee strength should not impact exports as much as some may think, because generally, a weak dollar environment sees higher global growth. Going back to the first decade, again, that weak dollar and strong rupee environment saw very strong Indian export growth. Finally, all this does not necessarily imply any kind of structural de-dollarisation, just cyclical dollar weakness.”
Abhishek Goenka, chief executive of IFA Global, highlighted the rupee’s decoupling from the greenback’s trajectory. “A weaker rupee against non-dollar currencies is positive for exporters, provided they are not overhedged,” he said, noting that euro and UK pound have touched new highs against the rupee. “It’s a great time for those receiving inward remittances in these currencies,” he added, suggesting risk reversals as a hedging strategy for exporters.He linked the dollar’s softening to a waning geopolitical hegemony: “The central role that the US used to play in global geopolitics allowed it to enjoy exceptionalism. That exceptionalism is now under serious threat.”
Forex consultant KN Dey saw the dollar’s retreat as a result of the Trump administration’s delay in implementing new tariffs. He pointed to the euro’s ascent to 1.15—significant, as it constitutes 57% of the dollar index. While this has bolstered India’s foreign exchange reserves, he cautioned that “it would also make travel to Europe and education very expensive.” Dey added that European governments, grappling with economic weakness, are unlikely to tolerate prolonged currency appreciation and may act to curb it.
Riya Singh of Emkay Global noted that the dollar index (DXY) had fallen from 110.17 to below 98, a slide that has buoyed non-dollar currencies. “As for de-dollarisation, it appears unlikely in the near term,” she said. “The recent decline in the U.S. dollar seems more driven by policy uncertainties under the Trump-era narrative, economic slowdown concerns, and expectations of 80–100 basis points of rate cuts by the Fed year.” While acknowledging some diversification into gold, Singh argued that “a full-scale shift away from the dollar remains both costly and largely unproven. The USD still accounts for the majority of global forex reserves, trade settlements, and SWIFT transactions.”
Harsh Madhusudan Gupta of Ionic Asset took expects the rupee to gain both in real and nominal terms, though he is sceptical of de-dollarisation. “Given low inflation differences this time compared to the first decade of the millennium (which is when the dollar was last in a down cycle), INR could noticeably appreciate against the USD in nominal terms as well. Against other developed market currencies also, the rupee should see appreciation, though less muted.This broad real rupee strength should not impact exports as much as some may think, because generally, a weak dollar environment sees higher global growth. Going back to the first decade, again, that weak dollar and strong rupee environment saw very strong Indian export growth. Finally, all this does not necessarily imply any kind of structural de-dollarisation, just cyclical dollar weakness.”
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