Currency Market News: Rupee slips 21 paise to 85.60 vs US dollar

The rupee declined by 21 paise to close at 85.60 (provisional) against the US dollar on Tuesday, dragged down by a strong American currency and persistent foreign fund outflows.

Forex traders said the domestic unit stayed under pressure amid weak equity market sentiment and ongoing geopolitical tensions. Market participants are also watching closely for signals from the Reserve Bank of India’s monetary policy announcement later this week.

RBI policy outcome on June 6

The Reserve Bank of India’s Monetary Policy Committee (MPC) is set to begin its three-day meeting on Wednesday, with the policy decision scheduled for release on June 6. The outcome could influence future movements in the rupee, particularly if there are signals around interest rate adjustments or inflation concerns.

Dollar gains despite mixed global cues

At the interbank foreign exchange, the rupee opened at 85.55 and traded between a high of 85.44 and a low of 85.60 against the greenback. The local currency eventually settled at 85.60, down 21 paise from Monday’s close of 85.39, when it had appreciated by 16 paise. The dollar index was trading higher at 98.95, up 0.25 per cent, showing resilience despite a disappointing US manufacturing PMI and slower-than-expected growth in China’s factory output.

Weak equities, FIIs weigh on sentiment

Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, said that weak domestic equities and FII outflows contributed to the rupee’s slide. “Trade tensions between the US and China and the ongoing Russia-Ukraine conflict may also be weighing on the rupee. Traders are likely to watch for US job openings and factory order data for further cues,” he said, projecting a trading range of 85.20 to 85.90 for USD-INR.

Meanwhile, Brent crude futures fell 0.12 per cent to $64.55 per barrel, offering some relief on the import front.

On the equities front, the BSE Sensex dropped 636.24 points (0.78 per cent) to close at 80,737.51, while the NSE Nifty fell 174.10 points (0.70 per cent) to 24,542.50. FIIs were net sellers to the tune of Rs 2,589.47 crore on Monday, as per exchange data.

Adding to the pressure, the latest HSBC India Manufacturing PMI for May declined to 57.6 from April’s 58.2, marking a three-month low. The slowdown reflects softer demand conditions, inflationary strain and global uncertainty.