The rupee fell 13 paise to 85.55 against the US dollar in early trade on Tuesday, following a muted trend in domestic equities and foreign fund outflows. The recent spike in the US 10-year yield, according to forex traders, is a reflection of growing monetary and fiscal policy concerns, which are raising borrowing costs and depressing the Dollar Index.
Key Highlights
On May 20, 2025, the Indian rupee fell to 85.55 versus the US dollar due to a decline in foreign fund outflows and weak domestic stocks.
The market is now more uncertain due to rising US Treasury yields and possible changes in trade policy, which has an effect on investor sentiment and currency values.
Moreover, US Treasury Secretary Scott Bessent said there could be sharp increases in tariffs on US trading partners. Such action was reported as capable of shaking up the market.
On the interbank foreign exchange, the domestic unit started the day at 85.47 and reduced to 85.55 against the dollar which equals a 13-paise drop from yesterday’s close.
The local currency appreciated by 15 paise and was offered at 85.42 per dollar on Monday.
Based on Anil Kumar Bhansali’s statement, the opening rate of the Indian rupee was weaker today and he predicts it will settle between 85.25 and 85.75 for the whole day, since there is no fresh market news.
Bhansali pointed out that with US yields falling, there may be some buying in USD to lift the pair, as the rupee is currently consolidating.
On the other hand, the dollar index, representing the US dollar’s value against six other currencies, dropped by 0.06 percent to 100.36.
US Treasury Secretary Scott Bessent has alerted companies about the risk of significantly raised tariffs by trading countries. Resuming trade disruptions could cause people to fear another recession and result in more uncertainties, causing movements in the markets, Bhansali says.
Brent crude which sets the global price for oil, gained 0.02% and was trading at USD 65.55 per barrel.
Muted Brent oil prices at USD 65 per barrel were seen due to signs that the US-Iran deal may stall, reducing oversupply fears, although talks about a ceasefire in Russia-Ukraine were a worry for investors.
After speaking with Russian President Vladimir Putin on Monday, President Trump stated that Russia and Ukraine will set out to achieve a cease-fire and conclude the war.
Within the domestic share market, the BSE Sensex added 55.37 points or 0.07 percent and closed at 82,114.79, while the Nifty increased by 10.65 points and stood at 24,956.10.
Foreign institutional investors (FIIs) sold equities worth Rs 525.95 crore net on Monday, according to exchange data.
