Rupee Holds Steady at 85.12—But Will Global Uncertainty Tip the Scales?

Image Source: Business Standard

The Indian rupee opened steady at 85.12 against the US currency on Tuesday, showing a risk-averse tone in currency markets amid lingering global economic uncertainties. Following a marginal advance on Monday—when the rupee hit a near one-month high of 85.03, supported by handsome foreign inflows and a softer dollar—the local currency fell 4 paise in early trade, under pressure from sustained dollar demand and losses in regional peers.

Key Points:

The rupee opened at 85.11, soon sagging to 85.19 as short-covering in the dollar and recession fears returned.
Monday's advance was led by strong foreign portfolio investment in Indian equities and debt, as FIIs bought almost ₹1,970 crore worth of shares.
Global conditions are still a mixed bag: the dollar index fell to 98.09, its lowest in years, but Brent crude rose to $66.61 per barrel, putting mild pressure on the rupee.

Sustained worries about US monetary policy, trade tariffs, and recession fears are making traders risk-averse. The US President's attack on the Fed and demands for rate cuts now have increased market jitters.

The rupee is likely to move in a tight range of 85.00–85.50 in the near term, with any further movement depending on global signals and local equity direction.

Source: CNBC TV18, The Hindu Business Line, The Week, Trading Economics, Indian Express