Rupee falls 25 paise to close at 86.56 against U.S. dollar

FIIs sold equities worth ₹5,015.46 crore net on January 27, 2025, according to exchange data. File Photo: S.R. Raghunathan/The Hindu

The rupee depreciated 25 paise to close at 86.56 (provisional) against the U.S. dollar on Tuesday (January 28, 2025), as global risk sentiments were dampened amid tariff threats by the U.S. President Donald Trump.

Forex traders said the rupee continued to face pressure due to sustained foreign fund outflows and the strength of the American currency in the overseas market amid unabated dollar demand from oil importers and weak risk appetite.

At the interbank foreign exchange, the rupee opened on a weak note at 86.53, and during the day touched a high of 86.50 and a low of 86.57 against the American currency.

The local unit settled for the day at 86.56 (provisional), registering a fall of 25 paise over its previous close.

On Monday (January 27, 2025), the rupee depreciated 9 paise to close at 86.31 against the U.S. dollar.

“The Indian rupee declined as global risk sentiments were dampened amid tariff threats by Mr. Trump. This impacted the Chinese Yuan, which also led to strengthening of the U.S. dollar,” said Anuj Choudhary – Research Analyst at Mirae Asset Sharekhan.

Mr. Choudhary further said a surge in U.S. treasury yields and FII outflows also pressurised the rupee. However, a decline in crude oil prices cushioned the downside.

“We expect the rupee to trade with negative bias on a strong U.S. dollar and persistent foreign fund outflows. Importer demand for dollars and uncertainty over tariffs by the U.S. administration may further weigh on the rupee,” Mr. Choudhary said.

The United States will impose tariffs on the countries that “harm” America, President Mr. Trump has said, as he named China, India and Brazil as high-tariff countries.

“We’re going to put tariffs on outside countries and outside people that really mean harm to us. Well, they mean us harm, but they basically want to make their country good,” Mr. Trump told House of Republicans at a Florida retreat on Monday (January 27, 2025), the first after he became the president for the second term last week.

However, overall weakness in crude oil prices and central bank intervention may support the rupee. Investors may remain cautious ahead of the FOMC (Federal Open Market Committee) meeting outcome this week.

The Reserve Bank of India’s announcement of the open market operations (OMO) may also support the rupee at lower levels.

The Reserve Bank of India on Monday (January 27, 2025) said it will purchase government securities worth ₹60,000 crore in three tranches and announced several other steps to inject liquidity into the banking system.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.52% higher at 107.89.

Brent crude, the global oil benchmark, rose 0.52% to $77.48 per barrel in futures trade.

In the domestic equity market, the 30-share BSE Sensex settled 535.24 points, or 0.71%, up at 75,901.41 points, while the Nifty rose 128.10 points, or 0.56%, to close at 22,957.25 points.

Foreign Institutional Investors (FIIs) offloaded equities worth ₹5,015.46 crore in the capital markets on a net basis on Monday (January 27, 2025), according to exchange data.