Rupee Falls Below 86 Mark Amid Crude Surge and Trade Deal Uncertainty

Mumbai, July 14 – The Indian rupee weakened sharply by 22 paise to settle at 86.02 against the US dollar on Monday, breaching the 86-mark for the first time in weeks. Rising global crude oil prices, a stronger US dollar, and persistent foreign fund outflows contributed to the decline.

The local currency opened at 85.96 and moved within a tight range of 85.92 to 86.05 at the interbank foreign exchange before ending the session at 86.02. This marked a significant drop from Friday’s close of 85.80.

Key Drivers Behind Rupee Depreciation

Currency traders cited the delay in progress on the much-anticipated India-US bilateral trade agreement as one of the major overhangs. Additionally, recent tariff actions by the US on key trade partners like the European Union and Mexico have heightened global uncertainty, adding pressure to emerging market currencies.

Global and Domestic Pressures

• Dollar Index: Up 0.03% to 97.82, reflecting broad strength of the US dollar
• Brent Crude: Jumped 1.56% to USD 71.46 per barrel in futures trade
• Foreign Outflows: FIIs offloaded Indian equities worth ₹5,104.22 crore on Friday

The Reserve Bank of India was reportedly active in the market to manage volatility and curb excessive depreciation. However, traders expect the rupee to remain in the 85.75-86.25 range on Tuesday as markets await the release of US CPI data.

Trade Deal Talks and Market Sentiment

A team from India’s commerce ministry has arrived in Washington for a four-day round of talks on the proposed India-US bilateral trade agreement (BTA). The outcome of these discussions is expected to impact market sentiment significantly.

Broader Market Indicators

On the equity front, Indian markets ended in the red:

• Sensex: Fell 247.01 points to close at 82,253.46
• Nifty: Declined 67.55 points to settle at 25,082.30

Meanwhile, wholesale price inflation (WPI) turned negative for the first time in 19 months, with June data showing a 0.13% decline due to easing prices in food, fuel, and manufactured goods.

Additionally, India’s forex reserves saw a dip of USD 3.049 billion, slipping to USD 699.736 billion for the week ended July 4, according to the latest RBI data.

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