Rupee rises 20 paise to close at 87.43 against US dollar

Mumbai: The rupee appreciated 20 paise to close at 87.43 (provisional) against the US dollar on Wednesday, as a weak greenback and a positive momentum in domestic equity markets enthused investors.

Forex traders said weak crude oil prices and cooling domestic inflation supported the rupee, but uncertainties over trade tariffs and foreign fund outflows capped the sharp upside for the domestic unit.

At the interbank foreign exchange, the rupee opened at 87.63, and oscillated between an intraday low of 87.72 and a high of 87.28 against the American currency.

The rupee finally settled at 87.43, higher by 20 paise over its previous close.

On Tuesday, the rupee appreciated 12 paise to close at 87.63 against the US dollar.

"The rupee experienced its biggest one-day appreciation since July 3, driven by a decline in the US dollar. The dollar weakened amid expectations of a September interest rate cut from the Federal Reserve, following a decline in US inflation," Dilip Parmar, Research Analyst, HDFC Securities, said.

"Further bolstering the rupee's performance were several domestic and regional factors, including gains in Indian equities and other Asian currencies, a fall in crude oil prices, and a fall in the domestic Consumer Price Index (CPI)." Meanwhile, Brent crude prices fell 0.54 per cent to USD 65.76 per barrel in futures trade.

The dollar index, which gauges the greenback's strength against a basket of six currencies, declined 0.44 per cent to 97.66.

"The rupee rose sharply on cooling inflation and strength in the domestic markets. India's CPI inflation cooled off to 1.55 per cent in July 2025 vs the forecast of 1.76 per cent and 2.1 per cent in June. The US Dollar too fell as CPI data was in line with estimates, raising odds of a rate cut by the Fed in September," said Anuj Chaudhary, Research Analyst, Commodities and Currencies, Mirae Asset Sharekhan.

Retail inflation slowed to an 8-year low of 1.55 per cent in July, falling below the Reserve Bank's comfort zone for the first time since January 2019, helped by subdued prices of food items, according to government data released on Tuesday.

The government has tasked the Reserve Bank to ensure that the consumer price index-based retail inflation remains at 4 per cent with a margin of 2 per cent on either side.

Chaudhary further noted that sliding crude oil prices also supported the rupee.

"We expect the rupee to trade with a positive bias on risk sentiments in the global market and a weakening US dollar. Softening inflation and declining crude oil prices may further support the domestic currency.

"However, the ongoing trade tariff war between India and the US and FII outflows may cap sharp upside. Investors may remain cautious ahead of US President Donald Trump and Russian President Vladimir Putin's meeting on Friday," Chaudhary said.

In the domestic equity market, the 30-share sensitive index Sensex climbed 304.32 points to settle at 80,539.91, while Nifty rose 131.95 points to close at 24,619.35.

Foreign Institutional Investors offloaded equities worth Rs 3,398.80 crore on Tuesday, according to exchange data.