The Indian rupee is expected to gain mild support this week as foreign portfolio inflows begin to arrive through two major initial public offerings, while bond yields are likely to soften following a lighter-than-anticipated borrowing schedule announced by states for the current quarter.

 

On Friday, the rupee settled at 88.77 per U.S. dollar, showing a slight weekly decline after touching a record low of 88.80 earlier in the week. Meanwhile, the U.S. dollar index eased by nearly 0.5 percent against other major currencies.

 

Market participants believe that inflows linked to upcoming IPOs will provide some stability to the currency. Tata Capital’s $1.75 billion share sale begins on October 6, followed by LG Electronics India’s $1.3 billion issue on October 7. Altogether, Indian companies are projected to raise around $8 billion during the October–December quarter.

 

Analysts, however, caution that any meaningful turnaround for the rupee may depend on favorable progress in trade talks between New Delhi and Washington. A trader at a state-owned bank noted that sustained improvement is unlikely without a broader shift in sentiment from the U.S.-India negotiations.

 

According to economists at HSBC, if the United States continues to impose 50 percent tariffs on Indian exports for a full year, the country’s current account deficit could nearly double, though it would still remain within manageable limits.