On Thursday (June 12, 2025), the Indian rupee opened stronger and appreciated by 7 paise to 85.46 against the US dollar in early trade, supported by a combination of factors including a weak US dollar, a decline in global crude oil prices, and a positive opening in the domestic equity market.

Despite the upbeat tone, gains in the local unit were capped by persistent foreign institutional investor (FII) outflows, according to forex dealers and treasury experts.

Opening Performance

At the interbank foreign exchange market, the rupee:

• Opened at 85.43

• Touched 85.46, marking a gain of 7 paise from its previous close

The local unit had settled at 85.53 on Wednesday (June 11, 2025).

Forex traders cited the softening of the dollar index, stable oil prices, and stock market optimism as the main drivers for the early rupee movement.

Expert View

According to Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP:

“The rupee, which gained on Wednesday, opened higher today as the dollar index fell. Although most Asian currencies remained range-bound, the rupee managed to stay buoyant.”

He added:

“The rupee is expected to trade in the range of 85.25 to 85.75 as dips get bought. Importers may hedge short-term exposures near 85.25, while exporters should consider hedging above 85.75.”

Global and Domestic Factors

• The dollar index, which measures the greenback against a basket of six major currencies, fell 0.07% to 99.02.

• The US dollar weakened further after softer CPI inflation data, raising expectations of a Federal Reserve rate cut.

• US President Donald Trump’s softened stance on tariff deadlines also weighed on the dollar.

Bhansali noted:

“The dollar slid on signs that the US may extend tariff deadlines and on growing expectations of a rate cut by the Fed following soft inflation data.”

Crude Oil and Equities

• Brent crude futures fell 0.09% to $66.81 per barrel, easing inflationary concerns and supporting the rupee.

• Positive momentum in Indian equity markets also provided support to the currency.

As of early trade:

• Sensex was up by 108.02 points at 82,623.16

• Nifty gained 38.7 points to reach 25,180.10

This equity rally comes even as broader markets remain cautious due to global uncertainty and lack of fresh positive triggers.

FII Outflows Weigh on Sentiment

According to exchange data, Foreign Institutional Investors (FIIs) were net sellers, having offloaded ₹446.31 crore worth of equities on June 11.

This continued selling activity by overseas investors has raised concerns about capital flight, which could limit further appreciation of the rupee despite supportive fundamentals.

Market Outlook

Market participants are awaiting India’s Consumer Price Index (CPI) inflation data, due later on Thursday, which could impact currency direction.

Depending on the inflation print and the US macroeconomic narrative, the rupee may either:

• Stay within a narrow band of 85.25 to 85.75

• Or face fresh volatility in case of unexpected data outcomes

Analysts believe that short-term gains may be restrained, and volatility could increase as markets interpret inflation data, oil price moves, and further FII activity.

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