Rupee falls 47 paise to 85.87 against USD amid FPI outflows and trade concerns

NOOR MOHMMED

09/Jul/2025

Rupee closed at 85.87/USD, falling 47 paise amid sustained foreign portfolio investor outflows.
Tariff tensions and weak global sentiment added pressure on the domestic currency in forex markets.
RBI may intervene to stabilise rupee as currency volatility continues in early July.

The domestic currency, which had shown some resilience earlier this month, saw renewed pressure after foreign portfolio investors (FPIs) pulled out ₹1,421 crore in the first week of July, according to data from depositories. This marks a reversal from June, when FPIs had invested ₹14,590 crore in Indian equities.

Analysts attribute the rupee’s weakness to a combination of factors, including the strengthening of the U.S. dollar, fears around new tariff measures by the U.S., and broader risk aversion in emerging markets.

“There’s clear uncertainty in global trade flows and market positioning is shifting away from risk-heavy assets,” said a currency dealer at a state-owned bank. “The rupee could test further lows unless the RBI steps in.”

The Reserve Bank of India (RBI) is believed to have intervened in the past to curb excessive volatility in the forex market. Any intervention now would aim to prevent sharp depreciation and maintain liquidity amid global headwinds.

Meanwhile, traders noted that the demand for dollars from oil importers and the weakness in Asian currencies also played a role in dragging the rupee down.

Market watchers expect the rupee to remain under pressure in the short term, especially if geopolitical tensions and macroeconomic data from the U.S. continue to favour the greenback.

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Rupee falls 47 paise to 85.87 against USD amid FPI outflows and trade concerns

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