August 6, 2025

The Indian Rupee faced a testing day on August 6, 2025, recovering from record lows to close at 87.73 against the US dollar, marking a 15 paise increase. The rebound was supported by a volatile US dollar and the Reserve Bank of India (RBI)'s decision to maintain interest rates steady. This initial recovery, however, was tempered by rising global crude oil prices, a decline in domestic equity markets, and ongoing uncertainties regarding U.S. tariffs imposed on India. Traders at the foreign exchange market observed that the rupee opened at 87.72 and fluctuated between a low of 87.63 and a high of 87.80 throughout the day before finally settling at 87.73. This came after the rupee faced a significant drop, ending the previous day at an intra-day low of 87.88, down 22 paise against the dollar. In a recently held monetary policy meeting, RBI Governor Sanjay Malhotra announced that the central bank would keep the key policy rate unchanged at 5.5% for the time being. This decision follows a series of rate cuts aimed at stimulating economic growth amid concerns over inflation and uncertain tariff situations. The RBI also confirmed that the growth projection for the fiscal year 2026 remained at a modest 6.5%. Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors, emphasized that the rupee was being supported at a narrower range. Factors influencing this range included RBI's protective measures at one end and foreign portfolio investors (FPIs) buying dollars amidst anticipated outflows. He noted a cautious watch for penalties that could come from the United States, particularly due to oil purchases from Russia, which could further affect the rupee's performance. Market analysts are observing the crude oil situation closely, and on this particular day, Brent crude prices increased by 1.45%, reaching $68.62 per barrel. Meanwhile, the overall strength of the dollar also rose slightly, reflected by a 0.01% increase in the dollar index to 98.79. In conjunction with these currency fluctuations, the domestic equity market faced challenges as well. The BSE Sensex dropped 166.26 points, concluding at 80,543.99, and the Nifty index declined by 75.35 points to settle at 24,574.20. Data indicated that foreign institutional investors (FIIs) had offloaded equities worth ₹22.48 crore, highlighting the cautious sentiment among investors amid the challenging economic landscape. Looking ahead, market participants expect the rupee to remain within a narrow range of 87.25 to 88.00 in the coming days, as uncertainties regarding U.S. tariffs and crude oil prices continue to captivate attention. Overall, the Indian Rupee's slight recovery against the dollar on August 6 reflects an intricate dance of market forces including crude oil prices, global currency dynamics, and domestic economic indicators, making the landscape quite complex for traders and investors alike.

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Tags: Indian rupee, Rbi, Forex, Crude oil, Market analysis,