CHENNAI: The Indian Rupee opened weaker on Tuesday, snapping a two-day streak of gains amid a lack of fresh domestic or global triggers. The currency began the session at 85.48 per US dollar, 8 paise lower than Monday’s close of 85.40. So far in 2025, the rupee has depreciated by approximately 0.3%, according to Bloomberg data.
Market Drivers and Sentiment
Analysts attribute the muted movement to a dearth of strong directional cues. According to them, the rupee is expected to remain rangebound between 85.25 and 85.75 throughout the day, despite some dollar-buying interest triggered by a decline in U.S. bond yields.
The Dollar Index (DXY), which tracks the greenback’s performance against a basket of six major currencies, was slightly lower at 100.36, reflecting continued pressure after Moody’s Ratings downgraded U.S. sovereign debt from AAA to AA1. The downgrade—driven by concerns over rising debt levels and fiscal uncertainty—has capped the dollar’s gains.
Capital Flows and Domestic Support
Adding to the rupee’s resilience, foreign institutional investors (FIIs) have pumped in nearly $1.4 billion over the past two trading sessions. Further inflows tied to upcoming Initial Public Offerings (IPOs) are expected, which could provide additional support to the local currency.
Analysts also note that the rupee is likely to trade in a broader 85.00–85.80 range in the near term, with scope for moderate strengthening if concerns over U.S. fiscal health continue to weigh on the dollar.
Crude Oil and Geopolitics
Global crude prices remained subdued amid easing geopolitical tensions. Following a phone call between U.S. President Donald Trump and Russian President Vladimir Putin, both leaders announced that Russia and Ukraine would begin negotiations to end the war. As a result, Brent crude dipped 0.08% to $65.49 per barrel, while WTI remained flat at $62.69 (as of 9:12 AM IST). Lower crude prices are typically supportive of the rupee, given India's status as a major oil importer.
Outlook
Despite Tuesday’s weaker start, analysts expect the rupee to remain broadly stable, supported by sustained FII inflows and easing crude oil prices. However, the key risk factor remains U.S. economic policy and the evolving fiscal narrative, which could influence global currency flows.
Analyst estimates peg the expected intraday range at 85.25 to 85.75, with a near-term range between 85.00 and 85.80.