Indian Rupee opens 3 paise lower at 85.87/$; RBI's MPC meet in focus

The Indian Rupee continued to weaken on Tuesday as foreign institutional investors (FIIs) resumed selling domestic equities amid ongoing global uncertainties following the US threats to impose an additional 50 per cent tariff on China.

 

The domestic currency weakened 3 paise to open at 85.87 against the greenback after closing at 85.84 on Monday, according to Bloomberg data. The Rupee soon depreciated to 85.92, and this comes a day after the currency logged the worst single session on Monday since February 6, 2023. 

 

The rise in the dollar also weighed on the currency. The dollar index surged on Monday as US bond yields jumped over 20 basis points in a single session. The dollar index — a measure of the value of the US dollar relative to a basket of foreign currencies — was down 0.28 per cent to 102.96, as of 9:15 AM IST.   

 

Meanwhile, US President Donald Trump warned of a 50 per cent tariff on Chinese goods, unless China removed its 34% retaliatory duties. Responding to additional tariffs, Beijing vowed to "fight to the end."  

 

The Indian rupee faced sharp depreciation on Monday as foreign outflows and global tensions weighed heavily, according to Amit Pabari, managing director at CR Forex Advisors. “the RBI may need to intervene as nearly $35 billion worth of forward contracts are scheduled to mature between April and June” On Monday, FIIs sold equities worth ₹9,040.01 crore, while DIIs bought stocks worth ₹12,122.45 crore, the second-biggest single-day buying this year. 

 

The Reserve Bank of India's (RBI's) Monetary Policy Committee (MPC) meeting decision that will be announced tomorrow will be the key factor to watch. The RBI is now widely expected to cut rates by 25 bps, lowering the repo to 6 per cent, as a pre-emptive move amid growing uncertainty and trade shocks, Pabari said. “The rupee found support near the 85.50 level and moved towards the 86.00–86.20 range.” 

 

Crude oil prices were trading near a four-year low as uncertainty regarding tariffs weighed on the global growth outlook. Brent crude oil was up 1.2 per cent to $64.98 per barrel, while WTI crude was up 1.30 per cent at 61.49 per barrel as of 9:15 AM IST. 

 

The broader trend of the rupee for the next one month could be between 84.50 to 86.50, Anil Kumar Bhansali head of treasury and executive director of Finrex Treasury Advisors LLP, said. “Exporters need to hedge near 86.00 levels to protect their costing while importers may wait for further hedging till 85.25 at least.”