FX Market Outlook, September 2025
Sameer Mahale
Global Trading Center
Shinhan Bank India
USD/INR
Spotlight on the Rupee
Indian exporters are now facing 50% tariffs on the goods exported to the US, because of which INR depreciated to
88.34 levels on Sep 01, 2025, breaking its strong resistance of 87.95 for the first time, which it was holding since
last 2 months
➢ Other Reasons for Rupee Depreciation:
▪
Outflows to the tune of ~$2.34 billion from the Indian economy during the month of August
▪
FOMO (Many importers hedged their open position near previous all time high level i.e.87.95 and after it
breached, many importers did payments which were due in near term)
▪
Stoploss on short USD positions triggered
▪
India is still in dialogue with the US for a Bilateral Trade Agreement; however there is no positive outcome yet
due to which INR shows negative market sentiment
➢ September 2025 Forecast:
▪
INR may appreciate if India-US Bilateral Trade Agreement shows some positive outlook by reducing tariffs on
Indian Goods
▪
India’s manufacturing output rose 7.07% YoY, compared with 4.8% in the previous quarter. However, we may
see India’s manufacturing activity shrinking in the upcoming quarter
▪
India supplies US mostly garments, gems & jewelry and chemicals in a huge volume. But after 50% tariffs on
Indian goods, we might see downfall in production activity
▪
Rupee slide to 88.34 is a short-term incident. We may see rupee appreciating after market stabilization. USDINR
is expected to trade in the range of 87.50 ~ 88.34, until it breaks upside
▪
Indian Central bank is not in favor of excess rupee depreciation, as a result we might see some sell-off in the
market to protect rupee and keep currency less volatile
2
USD/INR
In-House Projections – Rupee Radar
(Expected Range: 87.40~88.70)
Source: Bloomberg
3
Brent
Slippery but Strong: Oil’s Next Turn
▪
Oil traders expect OPEC+ to hold crude oil production steady as oil prices are down ~9% this year. Eight key alliance
approved a hike of 547,000 bpd for September; decision is due at OPEC’s meet on Sep 7, 2025
▪
Ukraine hit 10 Russian refineries on August 25, 2025, disrupting ~17% of Russian refineries capacity.
▪
We can expect volatility in oil prices due to less output from Russian oil refineries as well as if OPEC+ holds production
Source: Bloomberg
4
Europe
EURUSD (Expected Range: 1.1520~1.1920)
▪
Eurozone inflation accelerated to 2.1% in August, slightly above ECB’s 2% target. According to the data, EUR is in
bullish zone. There are less chances of a rate cut in the upcoming ECB meet due on September 11, 2025
▪
Break below 1.1580~1.1600 levels indicates EUR has neutralized bullish zone for the time being. Markets await US
NFP data due on September 05 this week for more clear direction on EUR/USD pair.
Source: Bloomberg
5
UK
GBPUSD (Expected Range: 1.3250~1.3595)
▪
USD is almost in a weaker zone against EUR,GBP,JPY currencies. There is possibility of Pound climbing to 1.3595
levels which was tested on August 14, 2025
▪
After a break of 1.3595 levels, we can see bullish pattern in GBPUSD pair with a rally up to 1.3789 level which was
already tested on July 1,2025
Source: Bloomberg
6
Japan
USDJPY (Expected Range: 145.60~149.20)
▪
Japan’s capital spending data released on 01 September indicates a pick up in business investment in Q2, this could
support the labor market and the demand-driven inflation could maintain the Bank of Japan’s rate hike bets
▪
The Japan - US trade deal, a $550 billion investment mechanism, raises concerns that Japanese companies may
focus on investing in the US leaving domestic operations behind. The Japanese Manufacturing companies will likely
become more cautious going forward as the impact of trump tariff broadens
▪
We saw sell-off from 149.20 level on upside twice in last 1 month. USDJPY takes support at 146.50 levels; if it breaks
we can see 145.60 levels
Source: Bloomberg
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Conclusion
From Goods to Grudges: The Tariff Effect
▪
The personal consumption expenditure (PCE) price index showed core inflation at 2.9% which is higher than June.
This is because some retailers have been stocking up their inventory to delay the impact of tariffs & keep prices
stable of rising import cost pressure
▪
Fed Officials refrained from a rate adjustment, citing uncertainty about the impact of trump tariffs on prices
▪
Domino Effect: Higher inflation will impact local spending & economy. Unemployed workers will lose their
purchasing power which can lead to unemployment for other workers
▪
Cost of goods manufactured in the US using imported components are also expected to rise
▪
Weaker dollar concept may give US added advantage to export goods to other countries but at the same time
imported goods would become costlier
▪
By sanctioning Russian oil, US wants to sell their oil to countries who exports goods to US, specially China & India
to keep US balance of trade profitable but actually this is not happening
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