Rupee falls 19 paise to 85.63 against dollar amid global trade war, market jitters
Forex traders said that despite a sharp drop in crude oil prices and a weakening US dollar, the domestic currency remained under pressure due to continuous foreign fund outflows triggered by global market sell-offs.
Mumbai: The rupee declined 19 paise to 85.63 against the US dollar in early trade on Monday, facing the heat of the global trade war triggered by the US reciprocal tariff and China’s retaliatory move that also crashed equity markets worldwide to their record lows.
According to forex traders, a steep decline in crude prices and a weaker American currency failed to support the domestic currency amid the incessant foreign fun outflows in line with the global sell-offs.
Meanwhile, they said that market participants remained concerned as the Reserve Bank of India’s monetary policy committee began its three-day deliberations on key interest rates. The decision of the six-member rate-setting panel will be announced on Wednesday.
At the interbank foreign exchange, the rupee opened at 85.79 and strengthened slightly to trade at 85.63 against the greenback, registering a loss of 19 paise from its previous closing level.
On Friday, the rupee settled 14 paise lower at 85.44 against the US dollar, a day after gaining 22 paise on Thursday, following the implementation of the US’ reciprocal tariff on about 60 countries.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.05 per cent lower at 102.71.
Analysts attributed the weakening dollar to disappointing services, PMI data and concerns over inflation and economic growth due to the global tariff war as China imposed 34 per cent import duties in retaliation to the Donald Trump administration’s sweeping tariff move.
Brent crude, the global oil benchmark, fell 2.73 per cent to USD 63.79 per barrel in futures trade, hit by twin shocks of Trump’s tariffs and an OPEC+ decision to increase output faster than previously announced.
In the domestic equity market, the 30-share BSE Sensex crashed 3014.32 points, or 4.00 per cent, to 72,350.37, while the Nifty tanked 1,016.75 points, or 4.44 per cent, to 21,887.70 points.
Foreign institutional investors (FIIs) offloaded equities worth Rs 3,483.98 crore on a net basis on Friday, according to exchange data.
The Reserve Bank of India on Friday said the country’s forex kitty jumped from USD 6.596 billion to USD 665.396 billion during the week ended March 28. In the previous reporting week, the overall reserves rose by USD 4.529 billion to USD 658.8 billion.
This is the fourth consecutive week of increase in the reserve, which was on a declining trend recently due to revaluation along with forex market interventions by RBI to help reduce volatilities in the rupee.
A monthly survey released on Friday showed, India’s services sector activity eased slightly in March, weighed down by a marginal slowdown in sales amid softer demand conditions and easing inflationary pressures.
The seasonally adjusted HSBC India Services PMI Business Activity Index fell from February’s reading of 59.0 to 58.5 in March, but remained above its long-run average of 54.2.
