The Indian rupee saw a significant drop of 51 paise to close at 87.23 (provisional) against the US dollar on Tuesday. This was mainly due to month-end dollar demand by importers and uncertainty surrounding US trade tariffs. The rupee also faced pressure from a stronger US dollar against other major currencies and continued foreign institutional investor (FII) outflows.
Starting weak at 86.83, the rupee lost ground throughout the day before settling at 87.23 (provisional), down 51 paise from the previous close of 86.72. Analysts pointed to uncertainty over US trade tariffs and importers’ demand towards the end of the month as reasons for the sharp decline in the rupee. Short position covering ahead of futures contract expiry also weighed on the local currency.
Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, stated, “We expect the rupee to trade negatively due to overall weakness in domestic markets, persistent FII outflows, and a potential recovery in the US dollar. However, intervention by the RBI and lower crude oil prices could offer support to the rupee at lower levels.”
On the equity front, the Sensex rose by 147.71 points to close at 74,602.12, breaking a five-session losing streak. In contrast, the Nifty continued its downward trend, dropping 5.80 points to 22,547.55. The dollar index, which measures the greenback against a basket of major currencies, inched up 0.04% to 106.64.
Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, noted, “The dollar strengthened as safe-haven flows increased following the US president’s announcement that tariffs on Mexico and Canada would proceed as planned.”
Brent crude, the global oil benchmark, slipped 0.12% to $74.69 per barrel in futures trading. FIIs sold equities worth Rs 6,286.70 crore on a net basis on Monday, as per exchange data.
Choudhary predicted that the USD/INR spot price could trade in a range of Rs 86.85 to Rs 87.40. Overall, the rupee’s performance will be influenced by domestic market conditions, FII flows, RBI intervention, and global factors such as the US dollar and crude oil prices.
