Rupee Swings Amid Global Pressures: Opens Weak, Recovers Later

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The Indian rupee opened at 85.75 against the US dollar on Thursday, slipping 24 paise due to the impact of fresh tariff policies announced by former US President Donald Trump. However, it later staged a modest recovery, settling at 85.30, buoyed by improved foreign inflows and stabilising Asian currency trends.

Initial Dip as Global Factors Weigh In

The rupee’s early weakness was driven by market jitters following Trump’s tariff rollout, which raised concerns about trade imbalances and investor sentiment. The dollar index also remained strong, putting pressure on emerging market currencies.

Recovery Backed by Domestic and Asian Cues

Despite the shaky start, the Indian currency rebounded, supported by a positive shift in Asian markets and increased dollar inflows. Experts attribute the late-session recovery to rising foreign direct investments, stable crude oil prices, and Reserve Bank of India (RBI) interventions aimed at curbing volatility.

Five Key Factors Supporting the Rupee

1. FDI and FPI Inflows: Strong foreign investments helped absorb initial selling pressure.
   
2. Crude Oil Stability: Lower oil prices reduced India’s import bill, easing forex demand.
   
3. RBI Action: Speculation of the central bank’s market intervention limited excessive fluctuations.
   
4. Asian Market Trends: A positive upturn in peer currencies like the Chinese yuan and Japanese yen offered additional support.
   
5. Corporate Dollar Sales: Indian exporters and businesses offloaded dollars, boosting the rupee’s strength.
   

Outlook: Will the Rupee Hold Ground?

Market analysts suggest that the rupee’s short-term trajectory will depend on global economic cues, especially the Federal Reserve’s policy stance and US job data. If Asian peers continue to strengthen, the rupee could maintain stability around the 85.30 mark. However, any fresh trade-related shocks may lead to further depreciation.

Investors are advised to watch out for policy updates, RBI measures, and international market trends, which will dictate the rupee’s movement in the coming days.