Rupee slides ahead of RBI MPC rate decision; opens lower at 85.87/$

Indian Rupee today: The domestic currency depreciated 7 paise to open at 85.87 against the dollar, after closing at 85.80 on Thursday

The Indian Rupee edged lower ahead of the Reserve Bank of India's (RBI) key interest rate decision, even as the dollar index remained largely steady.

 

The domestic currency depreciated 7 paise to open at 85.87 against the greenback, after closing at 85.80 on Thursday, according to Bloomberg.   

 

The Indian rupee rose by 10 paise on Thursday on the back of $1 billion in inflows from Adani Ports and another firms, according to Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP. "However, it failed to sustain those gains today as demand outpaced supply, with non-deliverable forwards (NDF) putting pressure on the currency."

 

The rupee continues to rely heavily on the Reserve Bank of India's support, Bhansali said. With foreign portfolio investor (FPI) flows remaining uncertain and recent inflows being tepid and sporadic, the rupee has been on a weakening trend, he added. 

 

All eyes will now be on the RBI's six-member monetary policy committee (MPC), which began its meeting on Wednesday and is expected to cut the repo rate by 25 basis points (bps) to 5.75 per cent. The committee is scheduled to announce its policy review at 10 AM on Friday 

 

The upcoming monetary policy meeting, where a 25 basis point rate cut is expected, and narrowing interest rate differentials are also contributing to rupee weakness, according to Bhansali. "For the day, the rupee is expected to move between 85.50 and 86.25, with markets closely watching the RBI’s actions."

 

The dollar index edged up slightly as investors evaluated the phone call between US President Donald Trump and Chinese President Xi Jinping. The two leaders spoke on Thursday and agreed to resume trade talks through upcoming official-level meetings. The index, which measures the greenback against a basket of six major currencies, was up 0.04 per cent at 98.78.

 

The dollar was headed for a weekly loss on Friday, undermined by signs of fragility in the US economy, and as trade negotiations between Washington and its trading partners made little progress despite a looming deadline, Bhansali said. 

 

Meanwhile, the friends-turned-foes episode deepened tensions as the US President Donald Trump threatened to end Elon Musk’s government contracts after his comment on the 'Big Beautiful Bill', sending Tesla shares to their worst in four years. 

 

In commodities, crude oil prices fell as investors remained on edge over slowing growth, although increased tensions between Russia and Ukraine limited losses. Brent crude price was down 0.35 per cent to $65.11 per barrel, while WTI crude prices were 0.39 per cent higher at 63.12, as of 9:12 AM IST.