Mumbai: The Indian Rupee opened stronger on Wednesday, rising 15 paise to 87.73 per US dollar, as markets remained cautious ahead of the Reserve Bank of India’s Monetary Policy Committee (MPC) decision. The rupee gained slightly due to a weakening greenback and RBI’s intervention in the forex market, but broader gains were capped by rising crude oil prices and foreign institutional investor (FII) outflows.
Key Market Movements
- Rupee opened at 87.72, briefly touching 87.73, compared to Tuesday’s closing low of 87.88 – its all-time weakest level.
- Brent Crude rose 0.62% to $68.06 per barrel, adding pressure on the rupee due to concerns over India’s import bill.
- The dollar index slipped 0.07% to 98.71, reflecting a weaker greenback.
Trump’s Tariff Threat Weighs on Sentiment
The rupee’s recent weakness is largely attributed to renewed threats from US President Donald Trump to impose additional tariffs on Indian goods. The warning came after India continued its purchase of discounted Russian oil, which the US views as undermining Western sanctions.
Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors LLP, noted:
“The rupee’s fall was well protected by RBI on Tuesday. But if no resolution is found over India’s Russian oil imports, tariffs will follow. For now, the rupee may stay range-bound with RBI defending the 88 mark.”
Trump’s remarks have intensified risk-off sentiment among investors, pushing the rupee to revisit its record low.
RBI Monetary Policy Outcome Awaited
All eyes are now on the Reserve Bank of India, whose rate-setting panel led by Governor Sanjay Malhotra is set to announce the bi-monthly policy decision today.
Markets are expecting the RBI to hold rates steady, but traders are watching for any commentary on inflation, economic growth, and the rupee’s volatility amid geopolitical and trade tensions.
FII Outflows Continue
Adding to the rupee’s woes, foreign investors remained net sellers on Tuesday, offloading equities worth ₹22.48 crore, according to stock exchange data. Continuous FII outflows typically weaken the rupee as investors exchange rupees for dollars to exit the Indian markets.
Equity Markets Open Positive
Despite currency pressure, the domestic equity market started on a positive note:
- BSE Sensex rose 113.41 points to 80,823.66
- Nifty50 gained 19.20 points to reach 24,668.75
Strong domestic fundamentals and earnings optimism are helping equities remain resilient.
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