The Indian rupee experienced a slight retreat from its initial rise, ultimately finishing the trading day with a modest increase of 5 paise, positioning it at 85.25 against the US dollar. This shift comes amid heightened risk aversion in global markets, largely fueled by concerns over trade tariffs. Forex analysts noted that while the rupee benefited from a weakened dollar and a notable drop in crude oil prices, sluggish performance in domestic markets and substantial foreign fund withdrawals limited its potential gains.
Rupee’s Daily Performance: Key Highlights
- The rupee started the day strong at 85.07, reaching an intraday peak of 84.96 before dipping to a low of 85.34 against the greenback.
- Closing at 85.25, the rupee marked a net gain of 5 paise compared to its previous finish.
On Thursday, the rupee had closed higher at 85.30, gaining 22 paise as the dollar weakened against other major currencies following President Donald Trump‘s announcement of reciprocal tariffs affecting around 60 countries.
Factors Influencing the Rupee
The dollar index, which measures the dollar’s strength against a basket of six currencies, slid 0.42 percent to 101.64. This decline was triggered by disappointing service sector PMI data and escalating trade tariff concerns, sparking fears of a downturn in the US economy.
Additionally, Brent crude, the global oil benchmark, saw a decrease of 0.84 percent to $69.55 per barrel. This drop was influenced by a dual impact: Trump’s tariffs and an OPEC+ decision to accelerate output increases.
Expert Insights on Future Trends
Anuj Choudhary, a Research Analyst at Mirae Asset Sharekhan, stated, "While we foresee a bearish trend for the rupee due to global risk aversion and foreign institutional investor outflows, the weakening US dollar and falling crude oil prices could provide some support at lower levels." He anticipates that traders should be alert for cues from the upcoming US non-farm payrolls data.
Choudhary projected that the USD/INR spot price may fluctuate between 84.95 and 85.55 in the near term.
Domestic Market Reaction
In the equity market, the 30-share BSE Sensex plunged 930.67 points (or 1.22 percent), concluding at 75,364.69. Meanwhile, the Nifty fell 345.65 points (about 1.49 percent), finishing at 22,904.45. Notably, foreign institutional investors were net sellers, offloading equities valued at ₹2,806 crore on Thursday.
As the global economic landscape continues to shift, keeping a close watch on currency movements and market trends will be crucial for traders and investors alike.
