The Indian Rupee weakened by 25 paise to 85.86 against the US dollar in early trade on June 4, 2025. The decline was largely driven by continued outflows of foreign funds, reflecting cautious sentiment among global investors.

Forex Market Movement and Contributing Factors

At the interbank foreign exchange, the rupee opened at 85.69 and slipped further despite some positive support from a softening American dollar and lower global crude oil prices.

The US Dollar Index, which measures the greenback’s strength against a basket of six major currencies, was trading lower by 0.05% at 99.18, helping to somewhat cushion the rupee’s losses.

Global oil benchmark Brent crude fell 0.32% to $65.42 per barrel, adding to the easing pressure on the currency since oil prices heavily impact India’s import bill.

Role of Domestic Equities and Foreign Fund Movements

Domestic stock markets showed resilience, with the BSE Sensex climbing 230.17 points to 80,967.68 and the Nifty rising 70.25 points to 24,612.75. This positive equity performance helped limit the rupee’s depreciation.

However, Foreign Institutional Investors (FIIs) sold equities worth ₹2,853.83 crore on June 3, 2025, according to exchange data. This sell-off pressured the currency as foreign fund outflows usually increase demand for the US dollar.

RBI’s Monetary Policy and Market Expectations

The Reserve Bank of India (RBI) Monetary Policy Committee (MPC) started its three-day meeting on June 4, 2025. Market participants expect the RBI to cut the repo rate by 25 basis points to 5.75% to support growth.

According to experts, RBI interventions through dollar sales in the 85.70-75 range have kept the rupee’s fluctuations between 85 and 86 in recent weeks despite external pressures.

Summary of Market Outlook

The rupee’s movement reflects a balance between external challenges such as foreign fund outflows and internal factors like equity market strength, RBI actions, and crude oil prices.

Going forward, currency traders will closely watch the RBI’s policy decision and global cues, including US dollar trends and oil price movements, to gauge the rupee’s trajectory.

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