Rupee Rises 9 Paise to 86.43 Amid Softer Dollar; Gains Capped by Tariff Talks and FII Outflows

Mumbai, July 28 – The Indian rupee appreciated by 9 paise to 86.43 against the US dollar in early trade on Monday, supported by a slightly weaker dollar. However, upside remained limited due to ongoing India-US tariff negotiations and persistent foreign fund outflows.

Rupee Opens Higher but Remains Range-Bound

The rupee opened strong in the interbank forex market, climbing to 86.43 in early trades, a gain of 9 paise from the previous close on Friday of 86.52. Import demand for dollars has kept it in a narrow range, despite the positive opening.

Dollar Index Edges Lower; Brent Crude Rebounds

The U.S. Dollar Index, which measures the dollar against a basket of 6 major currencies, fell 0.03 percent to 97.61, helping to support early gains for the rupee.

Brent crude futures increased 0.48 percent to USD 68.77 per barrel during Asian trading, after three-week lows. The gains were also supported by recent trade developments between the European Union and the United States, which reduced tariff-related ambiguity.

Focus Shifts to US Fed Policy Meeting

Investors are awaiting cues from the US Federal Reserve, which begins its two-day monetary policy meeting on Tuesday. Any signals on future interest rate direction could influence global currency movements, including the rupee.

Equities Trade Lower; FII Selling Persists

In the domestic equity market, the BSE Sensex declined 67.43 points or 0.08 percent to 81,395.66, while the NSE Nifty slipped 14.25 points or 0.06 percent to 24,851.25 in early trade.

Foreign Institutional Investors (FIIs) remained net sellers, pulling out ₹1,979.96 crore from Indian equities on Friday, according to exchange data. The ongoing outflows added pressure to the rupee’s upward momentum.

Forex Reserves Dip for Second Week

India’s foreign currency reserves declined by USD 1.183 billion to USD 695.489 billion for the week ending July 18. This was the second week in a row to decline. For the previous week, reserves fell by USD 3.064 billion. Reserves reached a peak of USD 704.885 billion at the end of September 2024.

Key Takeaways:

• Rupee opens at 86.43/USD, up 9 paise from Friday
• Dollar Index slips to 97.61; Brent crude up to USD 68.77
• Sensex and Nifty trade marginally lower
• FIIs net sold ₹1,979.96 crore on Friday
• Forex reserves fall to USD 695.489 billion

The rupee’s near-term trajectory remains closely tied to the outcome of trade negotiations and signals from global central banks.

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