Global risk-averse sentiments, coupled with a marginal recovery in the dollar, led the rupee to decline by 38 paise on Monday — the steepest fall in more than five weeks. The currency settled at 85.82 against the US dollar.
A steep decline in crude prices failed to arrest the fall in the rupee due to the withdrawal rush by foreign as well as domestic equity investors, forex traders said adding that currency exchange markets globally faced extreme volatility as investors tried to escape risks, following the US administration’s sweeping reciprocal tariffs on multiple countries and China’s retaliatory move on the American imports.
On the domestic macroeconomic front, market participants remain watchful as the Reserve Bank of India’s monetary policy committee began its three-day deliberations on key interest rates. The decision of the six-member rate-setting panel will be announced on Wednesday.
At the interbank foreign exchange, the rupee opened at 85.79 and moved in a wide range between the high of 85.57 and the low of 85.90 against the greenback during the day. The unit ended the session at 85.82 against the dollar, registering a loss of 38 paise from its previous closing level.
On Friday, the rupee had settled 14 paise lower at 85.44 against the US dollar, a day after gaining 22 paise on Thursday, following the implementation of the US’s reciprocal tariff on about 60 countries.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, was 0.04 per cent higher at 103.07 as of 7:30 pm Indian Time from the previous close of 103.02.
“Global risk-off sentiments and recovery in the greenback weighed on the Indian rupee. Trump’s reciprocal tariff led panic selling has been across the asset class, and the Indian financial market also reacted to the global cues. Investors worry over global recession after US reciprocal tariff worsened the sentiments,” said Dilip Parmar – senior research analyst, HDFC Securities.
He added that the forex market is expected to remain volatile amid global uncertainties, with the currency expected to trade between 85 and 86.50 in the near term.
“Selling pressure by FIIs may also weigh on the domestic currency. However, weak crude oil prices may support the rupee at lower levels. USD-INR spot price is expected to trade in a range of 85.50 to 86.20,” said Anuj Choudhary, research analyst at Mirae Asset Sharekhan.
But the dollar’s pedigree as a safe-haven currency seems to be eroding as uncertainty over tariffs and concern over their impact on US growth intensify.
Gold tumbles
Gold prices fell by ₹1,550 to ₹91,450 per 10 grams in the Delhi market on Monday amid heavy selling by jewellers and stockists as well as weak global trend, according to the All India Sarafa Association. On Friday, the precious metal of 99.9 per cent purity had finished at ₹93,000 per 10 grams.
“Gold price slipped...on Monday as panic selling in the equity markets and other asset classes continues to weigh down on safe-haven precious metals,” said Saumil Gandhi, senior analyst of commodities at HDFC Securities.
