The rupee opened 35 paise down on Monday at 85.59 per USD, with Trump’s reciprocal tariffs roiling global financial markets, including Indian equity markets.
The Indian unit had closed at 85.2350 last Friday, briefly strengthening beyond the 85 mark to 84.96/USD. The rupee, after touching a low/high of 85.7025/85.5550, is currently trading at 85.6350.
Amit Pabari, MD, CR Forex Advisors, said: “Despite the current weakness, the long-term outlook for the rupee remains constructive, with key supporting factors being declining crude oil prices towards 64 levels (a boon for India’s trade balance); and India’s Manufacturing PMI rising to 58.1 in March,indicating strong factory output and robust economic activity.”
Further, improved domestic liquidity (India’s banking system has swung from a liquidity deficit to a surplus of ₹1.93 lakh crore, creating a more favourable macro backdrop for the rupee) and a shift in US economic data (with unemployment rising to 4.2% and the services PMI dipping to 50.8, markets are now pricing in nearly a 90% chance of a Fed rate cut in June, up from 79% earlier) can keep the rupee supported.
Pabari observed that in the near term, a rebound towards 86.00–86.20 levels is possible. With 85.00 holding as a trong support at the downside.A decisive break below this support could pave the way for a deeper appreciation phase.
Meanwhile, yield of the 10-year benchmark Government Security (6.79 per cent GS 2034) is currently trading at 6.4875 per cent, up about 3 bps, against the previous close of 6.46 per cent due to expectations of inflationary pressures building up in the economy due to the global tariff war and the possibility that RBI may intervene in the forex market by selling dollars, which, in turn, may suck out Rupee liqudity.
Published on April 7, 2025
