Rupee Depreciates To 86.17 Against The US Dollar, As Dollar Strengthens Amidst Heightened Geopolitical Risks

Mumbai, June 16, 2025: The Indian currency depreciated by 6 paise, opening at 86.17 against the US dollar during early trade on Monday. This decline comes on the back of a surge in global crude oil prices and intensifying geopolitical instability in the Middle East region.

Early Market Movement

At the interbank foreign exchange market, the rupee began the session at 86.16 and soon slipped to 86.17. This drop follows a sharp fall of 59 paise on Friday, when the domestic currency closed at 86.11 against the dollar, continuing its downward trend.

Contributing Factors Behind Rupee Weakness

Rising Global Crude Oil Prices:

Brent crude, the global oil benchmark, increased by 0.77% to trade at USD 74.30 per barrel. This jump is linked to growing tensions between Israel and Iran. As a major oil importer, India faces increased trade deficit risks with costlier crude, which exerts pressure on the rupee.

Strengthening US Dollar:

The US dollar index, which measures the dollar’s performance against six major global currencies, rose by 0.15% to reach 98.33. A firmer greenback tends to reduce the appeal of emerging market currencies, including the rupee.

Foreign Institutional Investor (FII) Outflows:

On Friday, foreign institutional investors withdrew a net sum of ₹1,263.52 crore from Indian equity markets. This capital outflow adds to the downward pressure on the domestic currency.

Domestic Indicators Offering Support

Despite mounting global challenges, several domestic developments offered some relief for the rupee:

Stock Market Optimism:

Equity indices opened positively, with the BSE Sensex gaining 288.79 points to hit 81,407.39 in early trade. Similarly, the NSE Nifty rose by 98.9 points to reach 24,817.50 — reflecting positive investor sentiment in Indian markets.

Increase in Forex Reserves:

According to data released by the Reserve Bank of India, the country’s foreign exchange reserves climbed by USD 5.17 billion, reaching USD 696.65 billion for the week ending June 6. This robust reserve base serves as a cushion against currency market volatility.

Outlook from Currency Traders

Currency dealers indicated that while external pressures from global markets remain strong, India’s resilient macroeconomic fundamentals and the bolstered foreign reserve position provide underlying support. These factors may help contain further sharp declines in the rupee’s value in the near term.

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