On Tuesday, the Indian rupee ended its impressive seven-day upward trend, falling by 13 paise to close at 85.74 against the US dollar. This decline was driven by a surge in demand for dollars among importers and a rebound of the dollar against several major currencies. Forex analysts noted that this shift in market sentiment indicated a growing risk aversion among traders. However, robust domestic market performance and foreign capital inflows helped to mitigate the rupee’s losses.

Rupee’s Performance in the Forex Market

During the day, the rupee began trading at 85.59 and reached a peak of 85.58 against the dollar. As the session progressed, the currency experienced fluctuations, dipping to a low of 85.84 before settling at 85.74. This marked a decline of 13 paise from its previous closing.

• Previous Day’s Performance: On Monday, the rupee had shown resilience, gaining 37 paise to finish at 85.61, effectively erasing all losses incurred in 2025. Over the last seven trading sessions, it appreciated by 154 paise.

Market Predictions and Insights

Looking ahead, market experts anticipate that the rupee may strengthen further due to ongoing foreign investments and the positive performance of domestic equities. However, the rise in crude oil prices could limit any significant gains.

• Anuj Choudhary, a Research Analyst at Mirae Asset Sharekhan, mentioned, "We expect the rupee to maintain an upward trajectory influenced by foreign inflows and improving domestic markets. Yet, fluctuations in crude prices could temper substantial gains."

Key Economic Indicators to Watch

Traders are advised to monitor upcoming economic data releases from the US, including consumer confidence, new home sales, and the Richmond manufacturing index. The USD-INR spot price is projected to fluctuate between 85.50 and 86.

Global Market Impact

On the global stage, the dollar index, which measures the currency’s strength against a collection of six major currencies, was slightly down by 0.02%, resting at 104.24. Additionally, Brent crude oil saw a 0.68% increase, trading at $73.50 per barrel in futures markets.

Domestic Equity Market Update

In the Indian stock market, the 30-share BSE Sensex gained 32.81 points, or 0.04%, closing at 78,017.19. Meanwhile, the Nifty index also saw a modest increase of 10.30 points, or 0.04%, finishing at 23,668.65. Notably, foreign institutional investors (FIIs) made significant net purchases of equities worth ₹3,055.76 crore on Monday.

In summary, while the rupee faced a setback after a strong run, supportive domestic factors and foreign investments could play a crucial role in determining its future trajectory. Keep an eye on global economic indicators as they could influence currency movements in the days to come.