Rupee strengthens marginally as RBI intervention supports currency

The rupee inched up against the US dollar on August 1, likely aided by RBI intervention, even as foreign outflows and negative sentiment from US tariffs kept pressure on the currency

The rupee strengthened marginally against the US dollar on Friday, supported by likely intervention from the Reserve Bank of India (RBI). However, foreign portfolio outflows and negative sentiment stemming from the US imposition of tariffs on Indian exports continued to weigh on the local currency.

 

The rupee settled at 87.55 per dollar on Friday, against the previous day’s close of 87.59 per dollar. It appreciated up to 87.22 per dollar during the day, however dollar bids by importers weighed on the domestic currency by the end of the trade.

 

“During the week the rupee has fallen by 1.55 per cent and could have fallen more if not for the RBI protecting it. It made a closing low of 87.5950 yesterday, though the all-time low of 87.95 could not be breached,” said Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP, adding that the fall has corroborated with rise in dollar index, fall in euro and fall in Asian currencies as also fall in the equities.

 

 

“Rupee looks vulnerable to global forces while RBI being the only seller in the market,” he added.

 

On Thursday, the local currency closed at a new low, depreciating 0.2 per cent, after US President Donald Trump’s announcement of a 25 per cent tariff on Indian exports to the US from August 1, along with an unspecified penalty for buying oil and arms from Russia. 

 

Persistent foreign portfolio outflows also weighed on the local currency, which ended July with a cumulative 2.09 per cent decline, marking its worst monthly fall since September 2022.

 

On Wednesday, the rupee had settled at 87.42 per dollar, depreciating by 0.7 per cent in what was the sharpest single-day fall in over two and a half months.

 

According to a Business Standard poll, the rupee is expected to trade with heightened volatility with a majority

of the respondents seeing the local currency’s target level near 88 per dollar, and support level near 86.50 per dollar, by September 2025.

 

The rupee has depreciated by 2.37 per cent in the current financial year (FY26), while it has witnessed 2.21 per cent depreciation in the current calendar year (2025).

 

“The pressure (on Rupee) is expected to remain for the near term,” said a dealer at a state-owned bank. “The FPI outflows are weighing on the rupee along with the rise in dollar index,” he added.

 

Meanwhile, India’s foreign exchange reserves increased by $2.3 billion in the week ended July 25, latest data by the RBI showed. The total reserves increased on the back of a rise in foreign currency assets which increased by $1.3 billion during the reported week.