Indian Rupee ends above 86/$; Falls by 42 paise ahead of MPC decision

The Indian Rupee extended its losses on Tuesday, closing above the 86 mark against the US dollar. The decline was driven by a strengthening dollar index and renewed selling of equities by global funds amid ongoing tariff uncertainties.

 

The domestic currency weakened 42 paise to end at 86.26 against the greenback after closing at 85.84 on Monday, according to Bloomberg data. This is the first time since March 20 this year that the Rupee is trading above the 86 level. In the last two sessions alone, the currency has fallen by ₹1.02 against the dollar. 

 

As per reports, the currency also faced pressure from a weaker Chinese yuan. The People’s Bank of China (PBOC) set the yuan’s reference rate at 7.2038 — the weakest since September 2023, reports said. 

 

 

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 dollar index — a measure of the value of the US dollar relative to a basket of foreign currencies — was flat and was above the 103 mark as of 3:34 PM IST.  

 

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. 

 

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 0.20 per cent to $64.34 per barrel, while WTI crude was up 0.21 per cent at 60.83 per barrel as of 3:45 PM 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.”