Rupee Declines Against the U.S. Dollar Amidst Domestic Market Pressures
Mumbai, June 3, 2025 (PTI) – The Indian rupee experienced a decline of 21 paise against the U.S. dollar, closing at 85.60 (provisional) on Tuesday, June 3. The rupee’s slip can be attributed to a robust U.S. dollar and the ongoing outflow of foreign funds, which have affected investor sentiment.
Market Dynamics
Forex traders reported that the local currency remained under pressure due to weak domestic equity markets amid rising geopolitical uncertainties. Investors are particularly focused on the upcoming monetary policy announcements from the Reserve Bank of India (RBI), as the Monetary Policy Committee (MPC) prepares to convene to discuss key economic parameters. The committee is expected to announce its decisions on June 6, which could further influence the rupee’s trajectory.
During Tuesday’s trading session, the rupee opened at 85.55 and fluctuated within a range of 85.44 to 85.60 against the greenback before ultimately closing at 85.60, reflecting a total loss of 21 paise from the previous trading day. Notably, the rupee had appreciated by 16 paise to settle at 85.39 against the dollar on Monday.
Analyst Insights
Anuj Choudhary, a research analyst at Mirae Asset Sharekhan, noted that the rupee’s weakness can be linked to the dual pressures of declining domestic equities and foreign institutional investor (FII) outflows. He added that international factors, such as ongoing trade tensions between the U.S. and China and simmering conflicts between Ukraine and Russia, could continue to impact the rupee’s value. He commented, "Traders may also monitor U.S. job openings and factory orders data, which could offer further insights into the dollar’s performance."
Choudhary suggested that the USD-INR spot price may fluctuate within a range of 85.20 to 85.90 in the near term.
Broader Economic Context
The dollar index, measuring the greenback against a basket of six major currencies, was up by 0.25% at 98.95. Despite earlier losses linked to a disappointing ISM manufacturing purchasing managers’ index (PMI) report, it regained momentum as China’s manufacturing PMI data fell short of expectations.
In additional market indicators, Brent crude, the global oil benchmark, showed a slight decline of 0.12%, trading at $64.55 per barrel in futures markets.
On the domestic front, the 30-share BSE Sensex plummeted 636.24 points, or 0.78%, closing at 80,737.51, while the Nifty index fell by 174.10 points, or 0.70%, to settle at 24,542.50. A report indicated that foreign institutional investors sold equities worth ₹2,589.47 crore on a net basis on Monday, contributing to domestic market turmoil.
Moreover, a recent monthly survey indicated that India’s manufacturing sector growth has slowed to a three-month low, hampered by inflationary pressures and diminished demand, signifying overarching economic apprehensions.
As the markets await further developments from the RBI’s policy meet and subsequent macroeconomic indicators, stakeholders closely observe both domestic and international scenarios that could sway the rupee’s performance in the coming weeks.
This decline of the rupee is just one element of the larger economic picture, as analysts continue to closely monitor various influencing factors that drive currency fluctuations.
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