The Indian rupee weakened by 27 paise to close at 85.37 against the US dollar on Tuesday, impacted by a firm dollar index, weak domestic equities, and subdued foreign fund inflows.
Mumbai: The Indian rupee depreciated by 27 paise to close at 85.37 (provisional) against the US dollar on Tuesday, amid a strengthening dollar index, weak domestic equities, and muted foreign institutional investor (FII) activity. The decline followed a brief period of gains, with the rupee having appreciated by 35 paise on Monday and 50 paise the preceding Friday.
At the interbank foreign exchange market, the rupee opened at 85.15 and traded within a range of 85.11 to 85.45 against the greenback during intraday movement. It eventually settled at 85.37, marking a 27-paise fall from its previous close of 85.10.
Currency analysts attributed the rupee’s fall to a combination of global and domestic factors. A rebound in the US dollar index, which rose 0.45% to 99.31, signalled stronger demand for the dollar globally. Additionally, investors were cautious ahead of key domestic economic data, including industrial and manufacturing output figures for April and GDP data for the first quarter of FY25, both expected later this week.
Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, noted that the rupee faced pressure from weak equity market performance and a stronger dollar. “Muted foreign inflows and month-end dollar demand from importers also contributed to the decline,” he said. However, Choudhary pointed out that the overall weakness in the US dollar index and improved global risk sentiment might help stabilise the rupee in the near term. He projected that the USD-INR spot rate would likely trade within the range of 85.00 to 85.70.
In the commodities market, Brent crude futures were up by 0.31% at USD 64.94 per barrel, reflecting mild upward pressure on global oil prices. This has implications for India’s import bill and trade balance, which in turn affects the rupee.
Equity markets ended in the red, further denting investor confidence. The benchmark BSE Sensex declined by 624.82 points, or 0.76%, to close at 81,551.63. Similarly, the broader NSE Nifty fell by 174.95 points, or 0.70%, to settle at 24,826.20.
Provisional data from stock exchanges showed that foreign institutional investors were net buyers in the equity market on Monday, purchasing shares worth ₹135.98 crore. However, the inflows were not substantial enough to cushion the rupee against global pressures.
Overall, the rupee’s performance on Tuesday reflects a cautious trading environment, with both international currency trends and domestic economic uncertainty shaping sentiment. Traders and investors are expected to closely monitor upcoming macroeconomic data releases, which could provide further direction for the rupee in the short term.
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