Weak Dollar and Oil Prices Lend Support, But Market Volatility Caps Gains
Mumbai, April 4 – The Indian rupee edged up by 5 paise to settle at 85.25 against the US dollar on Thursday, reversing earlier gains amid global risk aversion and escalating concerns over trade tariffs.Forex traders cited a combination of factors driving the day's currency movement. While the domestic unit drew support from a declining US dollar index and a sharp drop in crude oil prices, overall gains were limited due to weak domestic markets and sustained foreign fund outflows.
Intraday Movement Reflects Volatility
At the interbank foreign exchange market, the rupee opened stronger at 85.07, briefly touched an intra-day high of 84.96, and then dipped to a low of 85.34. It eventually settled at 85.25 per dollar, marking a modest improvement over the previous close of 85.30.On Wednesday, the rupee had surged 22 paise as the dollar weakened in the wake of the US government announcing reciprocal tariffs on around 60 countries under then-President Donald Trump's administration.
Dollar Weakens Amid Growth Concerns
The US dollar index, which measures the greenback against a basket of six major currencies, was down 0.42% at 101.64. The decline was attributed to disappointing US services PMI data and increasing concerns about the economic impact of trade tariffs.Meanwhile, Brent crude futures dropped 0.84% to USD 69.55 per barrel, hit by the OPEC+ decision to accelerate output and the additional pressure from Trump’s tariff actions.
Analyst Outlook and Market Forecast
Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, noted:Choudhary added that the USDINR spot rate is likely to trade within the 84.95–85.55 range, with traders eyeing the upcoming US non-farm payrolls data for further cues.
Domestic Equities Extend Losses
Indian equity markets witnessed a sharp sell-off, adding pressure on the rupee. The BSE Sensex plunged 930.67 points (1.22%) to 75,364.69, while the NSE Nifty dropped 345.65 points (1.49%) to 22,904.45.Data from exchanges showed that foreign institutional investors (FIIs) offloaded shares worth ₹2,806 crore on a net basis on Thursday.
