Rupee falls 2 paise to close at 85.52 against US dollar

Mumbai: The rupee consolidated in a narrow range and settled for the day 2 paise lower at 85.52 (provisional) against the US dollar on Wednesday, as the support from positive domestic markets was negated by uncertainty over trade tariffs.

Forex traders said the Indian rupee ended the first trading session of the fiscal year 2025-26 on a flat note over Trump's reciprocal tariffs concerns and foreign fund outflows. A surge in crude oil prices also put pressure on the rupee.

However, positive domestic markets and a weak tone in the US dollar cushioned the downside, forex dealers said.

At the interbank foreign exchange, the rupee opened at 85.65 then touched an intra-day high of 85.50 and a low of 85.73 against the greenback. The unit ended the session at 85.52 (provisional) against the dollar, registering a loss of 2 paise from its previous closing level.

"We expect the rupee to trade with a positive bias on trade tariff uncertainty and worries over rising crude oil prices. However, foreign inflows and positive domestic markets may support rupee at lower levels," said Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan.

US President Donald Trump has repeatedly criticised the high tariffs charged by India and other countries on American goods.

He plans to roll out a set of reciprocal tariffs on April 2, which he says will be "Liberation Day" for the US.

On Friday, the rupee appreciated 24 paise to close at 85.50 against the US dollar.

This is the first trading session of the 2025-26 financial year. On April 1, the currency and bond markets were closed on Tuesday for the annual account closing of banks.

On March 31, stock, money, commodity and derivative markets remained closed on account of Eid-Ul-Fitr.

In the financial year 2024-25, the rupee depreciated more than 2 per cent. On April 2, 2024, it was quoted at 83.42 against the US dollar.

In March this year, the local unit appreciated 2.17 per cent, the maximum since November 2018 when the local unit had registered a gain of over 5 per cent.

The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.12 per cent lower at 104.13.

Brent crude, the global oil benchmark, fell 0.12 per cent to $74.40 per barrel in futures trade.

In the domestic equity market, the 30-share BSE Sensex rose 592.93 points, or 0.78 per cent, to close at 76,617.44, while the Nifty advanced 166.65 points, or 0.72 per cent, to settle at 23,332.35 points.

Foreign institutional investors (FIIs) turned sellers and offloaded equities worth Rs 5,901.63 crore on a net basis on Tuesday, according to exchange data.

Meanwhile, India's manufacturing sector growth rose to an eight-month high in March, driven by quicker increases in factory orders and production amid buoyant demand conditions, a monthly survey said on Wednesday.

The seasonally adjusted HSBC India Manufacturing Purchasing Managers' Index(PMI) was at 58.1 in March, up from 56.3 in February.

On Friday, the Reserve Bank of India said the country's forex reserves jumped $4.529 billion to $658.8 billion during the week ended March 21.

In the previous reporting week, the overall reserves had increased $305 million to $654.271 billion.

This is the third consecutive week of rise in the kitty, which has been on a declining trend recently due to revaluation, along with forex market interventions by the RBI to help reduce volatilities in the rupee.