The Indian rupee closed 8 paise lower at ₹85.56 against the US dollar on Friday, May 30, 2025, amid volatile domestic equity markets, rebounding crude oil prices, and cautious investor sentiment ahead of the release of India’s latest GDP data. Despite these pressures, the local currency found some support from steady foreign fund inflows, according to forex traders.

At the interbank foreign exchange market, the rupee opened at ₹85.35 and fluctuated between an intraday high of ₹85.25 and a low of ₹85.64, before finally settling at ₹85.56 (provisional), marking a decline of 8 paise from its previous close of ₹85.48.

Factors impacting the rupee

Analysts attributed the rupee’s weakness to multiple factors, including weak domestic equity performance, recovery in global crude oil prices, and month-end demand for dollars from importers. However, a softening dollar index and foreign institutional investor (FII) inflows provided a cushion against further depreciation.

Anuj Choudhary, research analyst at Mirae Asset Sharekhan, noted, “The rupee weakened due to negative sentiment in the domestic markets and a bounce in crude oil prices. Month-end importer demand for dollars also added pressure. But continued FII inflows and a weak US dollar index limited losses.”

He further added that traders may closely watch upcoming US macroeconomic data, including the core PCE price index and personal income figures, for direction. He expects the USD-INR spot rate to trade between ₹85.30 and ₹86 in the near term.

Global and domestic market cues

Globally, the US dollar index, which measures the greenback’s strength against six major currencies, was trading 0.28 per cent higher at 99.49. This came after the temporary recovery of the dollar, following a federal appeals court stay on an earlier ruling that struck down former US President Donald Trump’s reciprocal tariffs. The move reassured markets after initial uncertainty, lifting the dollar slightly.

On the commodities front, Brent crude oil, the international benchmark, rose 0.41 per cent to USD 64.41 per barrel in futures trade, signalling higher import bills for energy-dependent countries like India, thereby negatively impacting the rupee.

Equity markets decline adds pressure

In the domestic stock market, both key indices closed in the red, reflecting investor caution and contributing to the rupee’s downward movement.

• The BSE Sensex fell by 182.01 points, or 0.22 per cent, to settle at 81,451.01

• The Nifty 50 declined 82.90 points, or 0.33 per cent, to close at 24,750.70

The dip in equities came amid broader risk aversion, influenced by global market sentiments and caution ahead of key economic data releases.

Foreign fund inflows and RBI outlook

Despite the rupee’s decline, foreign institutional investors (FIIs) remained net buyers, infusing ₹884.03 crore into Indian equities on Thursday, May 29, 2025, according to exchange data. Their participation reflects long-term confidence in India’s economic trajectory.

Further bolstering investor sentiment, the Reserve Bank of India, in its annual report released on Thursday, affirmed that India is expected to remain the fastest-growing major economy in the world in FY26, reiterating the country’s strong macroeconomic fundamentals.

Forecast and market outlook

Looking ahead, the rupee’s movement will likely be dictated by a combination of global cues, such as the US economic data, dollar index movements, and crude oil price trends, along with domestic factors like GDP growth figures and equity performance.

Analysts expect the rupee to hover in a tight range between ₹85.30 and ₹86 over the next few sessions unless there is a significant macroeconomic trigger.

While volatility remains high, traders and investors will continue watching both external economic signals and domestic policy developments for clearer direction in the forex markets.

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