On March 26, 2025, the Indian rupee experienced a depreciation of 6 paise, settling at 85.78 against the US dollar during early trading sessions.
This decline was primarily influenced by a negative trend in domestic equities and the resurgence of the US dollar in the international market.

At the interbank foreign exchange, the rupee commenced trading at 85.71 against the greenback.
However, it soon lost momentum, touching 85.78, marking a 6 paise drop from its previous close.
This movement comes after the rupee ended a seven-session rally on March 25, closing with an 11 paise loss at 85.72 against the US dollar.

Factors Influencing the Rupee's Decline:

???? Negative Domestic Equities:

The downturn in India's stock markets exerted pressure on the rupee.

• The 30-share BSE Sensex recorded a decline of 59.56 points (0.08%), settling at 77,957.63 points.

• Similarly, the Nifty decreased by 20.60 points (0.09%), reaching 23,648.05 points.

???? Strengthening of the US Dollar:

The US dollar index, which measures the greenback's strength against a basket of six currencies, rose by 0.12%, trading at 104.30. This appreciation added to the rupee's depreciation.

???? Liquidity Constraints and Importer Demand:

Forex dealers highlighted that the rupee faced renewed pressure due to:
???? Liquidity constraints
???? Concerns over reciprocal tariff implementations
???? Month-end demand for the US currency from importers

Supporting Factors:

Despite the downward pressure, foreign institutional investors (FIIs) provided some support to the rupee.
On March 25, FIIs purchased equities worth ₹5,371.57 crore on a net basis, according to exchange data.

External Influences:

Global factors also played a role in the rupee's performance.
???? Brent crude, the international oil benchmark, saw a 0.22% increase, trading at $73.18 per barrel.
???? Geopolitical tensions, including US President Donald Trump's threat of a 25% tariff on countries purchasing oil and gas from Venezuela, have contributed to market uncertainties.

Market Outlook:

Analysts suggest that the rupee's trajectory will depend on:
???? Domestic economic indicators
???? Foreign fund flows
???? Global geopolitical developments

The Reserve Bank of India's (RBI) interventions and policy decisions will also be crucial in determining the currency's stability in the near term.

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