The Indian rupee saw a rebound on Thursday after posting losses in the previous five sessions, supported by a weaker dollar and expectations of central bank intervention. The rupee closed marginally up at 87.6250 against the dollar on Thursday, compared to 87.6800 on Tuesday, with Indian markets closed on Wednesday for a local holiday.
In early trade, the rupee had appreciated to as much as 87.5250 before facing pressure from broad-based dollar demand as importers increased their hedging activities due to concerns over the impact of steep U.S. tariffs on the currency. The Reserve Bank of India is believed to have stepped in on Tuesday to prevent further losses after the rupee hit an intraday low of 87.80 following the confirmation of additional tariffs on Indian goods by Washington.
Jigar Trivedi, a senior currency analyst at Reliance Securities, commented that the rupee is likely to continue facing pressure from U.S. tariffs. Meanwhile, the U.S. dollar index edged lower as investors anticipated a Federal Reserve interest rate cut next month, following signals from New York Fed President John Williams.
President Donald Trump's efforts to influence monetary policy, including his recent actions towards Fed Governor Lisa Cook, also contributed to the pressure on the dollar. However, Asian currencies, including the Korean won and Malaysian ringgit, strengthened against the weaker dollar.
On the domestic front, Indian equity indexes, Sensex and Nifty, both saw a decline of 0.8% on Thursday due to weakened risk appetite among investors. Despite this, the overall sentiment in the market remained cautious amid global economic uncertainties.
Overall, the Indian rupee's movement was driven by a combination of factors including the weaker dollar, central bank support, and concerns over U.S. tariffs. As the market continues to monitor these developments, the rupee's future performance remains subject to external factors and investor sentiment.
