USDINR Under Pressure From Continued FPI Outflows
Anindya Banerjee,
Head Currency and Commodity,
Kotak Securities
Mumbai, 12 December 2025: The initial pace of around $40 billion in T-bill purchases starting mid-December is being viewed by markets as a form of quasi-QE. Combined with a 25 bps rate cut at a time when U.S. inflation risks are tilting higher, this has amplified concerns about faster dollar debasement.
Commodity
Naturally, both gold and silver have responded with strong gains.
Silver is also benefiting from a notable physical squeeze. Asian buyers are aggressively demanding physical delivery, while Western sellers are finding it increasingly difficult to meet their derivative‐linked obligations.
Outlook: Remains firmly bullish.
Gold: Medium-term upside toward ₹1,50,000
Silver: Medium-term upside toward ₹2,20,000
Currency:
USDINR is under pressure from continued FPI outflows across both bonds and equities. With global yields climbing, Indian bonds are facing stress from the unwinding of the USD and JPY carry trades.
There are, however, incremental positives around the India–U.S. trade deal, which could provide intermittent relief to the rupee. Overall, we expect a broad trading range of 89.50–91.00 on spot.
