Rupee Declines 40 Paise to 95.76 Against Dollar Amid Tariff Concerns and Oil Price Pressures
The Indian rupee fell for the second consecutive session on Wednesday, closing down 40 paise at 95.76 against the US dollar. This decline was driven by concerns over proposed US tariffs, rising crude oil prices, persistent foreign fund outflows, and escalating geopolitical tensions. Forex traders reported that investor sentiment weakened following the Office of the United States Trade Representative’s (USTR) proposal for additional duties on imports from several countries, including India.
At the interbank foreign exchange market, the rupee opened at 95.43 and hit an intraday low of 95.80 before settling at 95.76. This marked a decrease from Tuesday’s close of 95.36. The USTR’s proposal includes a 12.5% duty on imports from 54 countries, citing issues related to forced labor. The uncertainty surrounding US-Iran relations further contributed to the negative sentiment in the market.
Market analysts noted that the rupee’s decline was exacerbated by capital outflows and concerns regarding US President Donald Trump’s tariff proposals. Dilip Parmar, a research analyst at HDFC Securities, indicated that rising crude oil prices and a stronger US dollar were also factors putting pressure on regional currencies. The Indian government is currently engaged with the US regarding Section 301 investigations related to forced labor and is working on finalizing an interim trade agreement.
Focus shifts to RBI policy decision
Attention is now turning to the Reserve Bank of India’s Monetary Policy Committee (MPC) meeting, where interest rates, inflation, and the rupee’s outlook will be discussed. The MPC meeting is scheduled from June 3 to June 5, with the policy decision expected to be announced on June 5 by RBI Governor Sanjay Malhotra.
As the dollar index rose 0.13% to 99.34, Brent crude prices increased by 2.76% to USD 98.65 per barrel in futures trade. On the domestic equity front, the Sensex fell by 303.67 points to close at 74,346.17, while the Nifty declined by 77.95 points to settle at 23,405.60. Foreign institutional investors (FIIs) were net sellers, offloading equities worth Rs 5,616.56 crore on Wednesday, according to exchange data.
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