Rupee Rises 22 Paise to 85.72 Against US Dollar as Crude Prices Ease, Dollar Weakens

Mumbai, July 8: The Indian rupee demonstrated a notable recovery in early trade on Tuesday, appreciating by 22 paise to 85.72 against the US dollar. This rebound comes after a significant decline on Monday and is primarily attributed to easing global crude oil prices and a weakening US dollar.

Rupee Recovers After Monday’s Sharp Fall

The rupee opened stronger at 85.75 at the interbank foreign exchange market and continued to gain, reaching 85.72. This 22-paise rise is a significant improvement from its previous close of 85.94 on Monday, when the local unit experienced a sharp 54-paise drop due to robust dollar demand from oil importers and an uptick in crude prices.

Favourable Market Sentiment Aids Rebound

Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, commented on the recovery, stating, “The rupee recovered towards closing yesterday after falling due to heavy dollar demand. There may have been some dollar sales from the RBI towards the closing, taking the rupee up.” He further suggested that the rupee’s opening today was slightly higher due to a recovery in Asian currencies, and he expects it to trade within the range of 85.40–86.00. The Reserve Bank of India (RBI) has historically intervened in the forex market to manage volatility, including through dollar sales to support the rupee.

Crude Oil Prices Slide on Global Concerns

A key factor supporting the rupee’s appreciation is the decline in global crude oil prices. Brent crude futures slipped by 0.37 per cent to USD 69.32 per barrel. This fall is a result of investors re-evaluating the impact of President Donald Trump’s newly announced tariffs on 14 nations, as well as ongoing concerns about oversupply stemming from increased output by OPEC+ (Organisation of the Petroleum Exporting Countries Plus) countries.

Bhansali noted, “Brent oil prices, which approached USD 70 per barrel, fell to USD 69.28 as investors assessed the impact of Trump’s latest tariffs and OPEC+ oversupply.”

Dollar Index Weakens Further

Further bolstering the rupee’s ascent, the US dollar weakened against major global currencies. The dollar index, which measures the greenback’s strength against a basket of six key currencies, fell by 0.19 per cent to 97.29. This broad-based softening of the US dollar provides a favourable environment for other currencies, including the Indian rupee.

Domestic Equities and FII Inflows Offer Support

Positive sentiment in the domestic equity market also contributed to the rupee’s strength. At the time of reporting, the BSE Sensex was trading 85.39 points higher at 83,527.89, while the NSE Nifty gained 16.50 points to 25,477.80.

Adding to the upbeat mood, foreign institutional investors (FIIs) were net buyers in the Indian equity market on Monday, purchasing equities worth ₹321.16 crore, according to exchange data. This inflow of foreign capital further supports the demand for the Indian rupee.

What’s Ahead for the Indian Rupee?

• Range-Bound Trading Likely: With easing crude prices, a weaker dollar index, and healthy FII inflows, the rupee is expected to trade in the 85.40–86.00 range in the near term, as per market experts.
• Crude Oil Watch: Any further softness in Brent crude could continue to support the rupee, but a reversal due to geopolitical tensions or OPEC+ surprises might again pressure it.
• US Trade Policy Uncertainty: Tariffs announced by the US on 14 nations may disrupt global trade flows. If safe-haven demand for the dollar rises again, the rupee could face renewed pressure.
• RBI Intervention Factor: The Reserve Bank of India may continue to intervene via dollar sales to manage volatility and prevent sharp depreciation.
• FII Flows & Equity Performance: Sustained foreign inflows and positive domestic equity momentum will remain key tailwinds for the rupee.

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