The Indian rupee remained steady at 84 per USD, holding near the record low of 84.05 reached on October 4th. This weakness in the rupee comes as the Reserve Bank of India (RBI) signaled a shift toward a dovish policy stance during its October meeting, while foreign currency outflows added to the pressure on the currency. Despite holding the benchmark policy rate at 6.5%, the RBI’s statements suggested the potential start of a loosening cycle, especially as it anticipates that food inflation will ease in the coming months.

The RBI's decision to maintain its rate was largely expected, but the dovish tone hinted that the central bank may look to lower rates in the near future. By pointing out the likelihood of relaxing upside risks to inflation, the RBI has set the stage for a more accommodative monetary policy. Still, the central bank remained cautious, emphasizing that it will not jeopardize its progress in controlling inflation over the past months.

The Indian rupee continued to face significant downward pressure due to ongoing foreign currency outflows. Investor sentiment has been swayed by a variety of global factors, including geopolitical tensions in the Middle East and the Federal Reserve's less-dovish outlook. These factors have driven investors away from riskier currencies like the INR and toward safer assets, compounding the difficulties for the Indian currency.

Moreover, the rupee's woes have been exacerbated by a pivot towards Chinese markets, as Beijing’s aggressive stimulus measures attract foreign investments away from India. This shift in capital flow has further eroded confidence in the Indian rupee, placing it under increased pressure in global currency markets.

While food inflation is projected to ease, broader economic uncertainties persist. The RBI’s cautious tone underscores the need to balance inflation risks with supporting economic growth, and its approach to monetary policy will be closely watched in the coming months. For investors and businesses, the performance of the INR against the USD and other currencies will be a key indicator of market sentiment and potential changes in monetary policy direction.

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As the Indian rupee continues to grapple with foreign currency outflows, geopolitical risks, and a less accommodating global monetary environment, it remains essential for businesses and investors to keep a close eye on currency movements and broader economic trends. Whether the rupee can stabilize or see further depreciation will depend on how these factors unfold in the coming months.