By Jaspreet Kalra
MUMBAI (Reuters) -The Indian rupee treaded water on Tuesday as mild dollar inflows helped offset the impact of the Chinese yuan’s decline, with traders expecting the rupee to hold a slightly positive bias in the near term.
The rupee was nearly flat at 85.13 per U.S. dollar as of 10:05 a.m. IST.
The local currency has steadied after a five-day winning streak that lifted it by more than 1.5% as the dollar sank to a three-year low against major peers.
On the day, weakness in the Chinese yuan squeezed Asian currencies, after the yuan’s daily fix – set by the central bank – moved lower despite broader weakness in the greenback.
Wavering investor confidence in U.S. assets amid concerns about the impact of sweeping changes to trade policy and threats to central bank independence has weighed on the dollar.
It has declined by over 9% against major peers since Donald Trump took over as U.S. President.
“Further losses cannot be ruled out if Trump’s policies undermine the credibility (institutional stability and integrity, sound monetary policy, and fiscal discipline) painstakingly rebuilt after the Global Financial Crisis,” DBS Bank said in a note.
The U.S. economy could slow unless interest rates are lowered immediately, President Donald Trump said on Monday, repeating his criticism of Federal Reserve Chair Jerome Powell.
However, the dollar weakness has offered some breathing room to emerging market assets. On the day, dollar offers from two foreign banks supported the rupee, a trader at a private bank said.
A pickup in foreign portfolio inflows, both for Indian equities and debt, has also supported the rupee over recent sessions, the trader added.
India’s benchmark equity index, the Nifty 50 is up about 2.3% over 2025 so far, outperforming the MSCI’s Asia ex-Japan equity index, which is down nearly 2% on the year.
(Reporting by Jaspreet Kalra; Editing by Janane Venkatraman)
