RBI Policy Uncertainty, Crude Oil Prices and Outflows Pressurise Currency

Mumbai | June 3 – The Indian rupee slipped 10 paise to 85.49 against the US dollar in early trade on Tuesday, weighed down by a firmer dollar, rising crude oil prices, and sustained foreign fund outflows.

Forex traders pointed to growing caution ahead of the Reserve Bank of India’s monetary policy announcement, along with volatile equity markets, as factors adding to the pressure on the domestic currency.

At the interbank foreign exchange market, the rupee opened on a weaker note and hovered within a narrow band, quoting at 85.49 against the greenback in early deals. This comes after the rupee had gained 16 paise to close at 85.39 on Monday.

Dollar Strengthens, Brent Crude Rises

The US dollar showed renewed strength against major currencies, with the dollar index climbing 0.23 percent to 98.86. Meanwhile, Brent crude futures rose 0.51 percent to USD 64.96 per barrel, adding pressure to India’s import bill.

Equity Markets Volatile; FIIs Exit

Indian equity benchmarks opened subdued. The BSE Sensex fell by 36.42 points to 81,337.33, while the NSE Nifty dropped 43.25 points to 24,673.35 in early trade.

Foreign institutional investors continued to offload Indian equities, with net outflows of Rs 2,589.47 crore recorded on Monday, according to exchange data.

Policy Events and Economic Indicators in Focus

Investor sentiment remains cautious ahead of the Reserve Bank of India’s Monetary Policy Committee meeting, which begins on June 4. The outcome of the policy review will be announced on June 6.

On the macroeconomic front, India’s manufacturing growth softened in May. The HSBC India Manufacturing PMI dropped to 57.6 from 58.2 in April, marking a three-month low due to inflationary pressure, weaker demand, and global uncertainties.

However, economic fundamentals remain robust. India’s GDP grew at 7.4 percent in the January-March quarter of FY25, supported by private consumption and strong construction and manufacturing activity.

Additionally, the government met its fiscal deficit target of 4.8 percent of GDP for FY25, while GST collections remained buoyant. May saw gross GST revenues exceeding Rs 2.01 lakh crore, maintaining momentum after April’s record high of Rs 2.37 lakh crore.

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