Rupee depreciates by 52 paise against the dollar to close at Rs 87.70 today

Mumbai, August 4 — Monday saw a weakened INR closing 52 paise lower at 87.70 against the benchmark USD. There were multiple reasons for this, starting with higher foreign fund outflows and renewed global trade issues. Traders reacted to growing uncertainty over the stalled US–India trade talks and the threat of a new 25% tariff on Indian exports. Month‑end demand from importers (especially oil firms) for dollars and sustained foreign institutional investor outflows further weakened the currency.

The INR opened the day at 87.21 at the interbank foreign exchange and steadily declined to an intraday low of 87.70, where it also settled. This marked a significant reversal from Friday’s gains when the rupee had appreciated by 47 paise to close at 87.18.

Consistent Impact on the Market and Investors

There has been a massive increase in FII sellings in the past couple of weeks, which resulted in a withdrawal of over ₹27,000 crore. This led to declines in equity indices and increased volatility. Export-dependent sectors like IT and pharma saw margin pressure due to tariff concerns, while import-heavy sectors faced rising costs.

Global cues weigh on sentiment

The rupee’s slide comes against the backdrop of broader market concerns over a potential disruption in the global trade landscape, triggered by fresh US tariffs. The decline was also cushioned slightly by a softening dollar index, which fell 0.37 percent to 98.77, and a drop in Brent crude prices by 1.06 percent to USD 68.93 per barrel after OPEC+ confirmed a production hike for September.

US economic data also added to global currency volatility. The dollar weakened after the US reported only 74,000 non-farm payroll additions in July 2025, well below the forecast of 106,000. Additionally, June figures were revised sharply downward to just 14,000 from the initial 147,000.

All eyes on RBI policy outcome

The Reserve Bank of India’s Monetary Policy Committee, headed by Governor Sanjay Malhotra, began its three-day deliberations on Monday to decide the next bi-monthly monetary policy. The outcome will be announced on Wednesday, August 6.

Equities post strong gains despite currency weakness

India’s equity benchmarks closed higher despite the rupee’s decline. The BSE Sensex surged 418.81 points, or 0.52 percent, to end at 81,018.72, while the NSE Nifty climbed 157.40 points, or 0.64 percent, to settle at 24,722.75.

However, foreign institutional investors remained net sellers, offloading Indian equities worth ₹3,366.40 crore on Friday, adding further pressure on the currency.

Outlook

Currency markets are expected to remain volatile in the near term, with the USD-INR pair likely to trade in the range of 87.40 to 88. Key triggers include upcoming domestic rate decisions, evolving US economic indicators, and ongoing trade negotiations between India and the US.

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