The Indian rupee managed to hold steady against the US dollar on Tuesday, closing with a marginal gain of 2 paise at 87.30 (provisional). Despite early losses, the rupee was supported by a weaker US Dollar index and a significant drop in crude oil prices.
Forex traders noted that the rupee traded with a flat to negative bias due to ongoing weakness in domestic markets and persistent selling pressure from Foreign Institutional Investors (FIIs). However, the rupee found some support from the overall weakness in the US Dollar and the decline in crude oil prices.
The session saw the rupee experiencing high volatility, opening at 87.38, touching an intraday high of 87.27, and a low of 84.40 against the US dollar. It eventually settled at 87.30 (provisional), recording a 2 paise gain from the previous day’s close.
Analysts expect the rupee to continue trading with a negative bias amid weak domestic market conditions and ongoing FII outflows. However, the rupee could find some support from lower crude oil prices and the weaker US Dollar. The USD/INR spot price is expected to fluctuate in the range of 87.10 to 87.60.
In global markets, the dollar index, which measures the greenback against a basket of other currencies, was down by 0.40% at 106.31. This decline was attributed to concerns over trade tariffs and disappointing economic data from the US.
Meanwhile, Brent crude, the global oil benchmark, fell by 1.49% to $70.55 per barrel in futures trading.
On the domestic front, the benchmark indices, BSE Sensex and Nifty, closed in the red, with the Sensex falling by 96.01 points to 72,989.93, and the Nifty declining by 36.65 points to 22,082.65.
Furthermore, FIIs continued to offload equities worth ₹4,788.29 crore in the capital markets on a net basis on Monday.
Internationally, President Donald Trump announced the imposition of 25% tariffs on imports from Mexico and Canada starting on Tuesday. The move was aimed at addressing fentanyl trafficking and illegal immigration issues, as well as reducing trade imbalances and encouraging more factory relocation to the US.
