The Indian rupee regained some ground on Wednesday, rising by 3 paise to settle at 85.69 (provisional) against the US dollar, driven by a surge in foreign fund inflows. Despite initial losses, the rupee managed to pare its declines and close higher.
Forex dealers noted that the currency faced pressure from liquidity constraints, concerns over potential tariff retaliations, and month-end demand for dollars from importers.
The rupee opened at 85.71, touched an intraday high of 85.68, and a low of 85.98 against the greenback, before ending the session at 85.69 (provisional), gaining 3 paise from the previous closing level, news agency PTI reported.
On Tuesday, the rupee had broken its seven-session rally, closing 11 paise lower at 85.72 against the dollar.
“The rupee gained strength after a brief pause on Tuesday, supported by renewed foreign fund inflows. Foreign banks and exporters played a significant role in increasing the supply of dollars into the market,” said Dilip Parmar, Senior Research Analyst at HDFC Securities.
However, trading volumes were subdued, with market participants adjusting positions ahead of the fiscal year-end, Parmar added.
Looking forward, the USD-INR pair is expected to find support near the 85.40 level, with resistance around 86.25, according to market experts.
Geopolitical risks, including tensions in Gaza and US air strikes on Iran-backed Houthi rebels, have also contributed to increased demand for safe-haven assets like the US dollar.
Meanwhile, US President Donald Trump’s threat of a 25% tariff on countries purchasing oil and gas from Venezuela has pushed Brent crude prices higher, forex dealers noted.
The dollar index, which measures the greenback against a basket of six major currencies, was up 0.03% at 104.21. Brent crude futures rose 0.63% to USD 73.48 per barrel.
In the domestic stock market, the 30-share BSE Sensex fell 728.69 points, or 0.93%, to close at 77,288.50, while the Nifty dropped 181.80 points, or 0.77%, to end at 23,486.85.
Foreign institutional investors (FIIs) were net buyers of equities worth Rs 5,371.57 crore on Tuesday, according to exchange data.
