MUMBAI, Mar 26: The rupee pared its initial losses and settled for the day higher by 3 paise at 85.69 (provisional) against the US dollar on Wednesday, supported by a resurgence of foreign fund inflows.
Forex dealers said the rupee is facing renewed pressure on liquidity constraints, concerns over reciprocal tariff implementations and month-end demand for the US currency from importers.
At the interbank foreign exchange, the rupee opened at 85.71 then touched an intraday high of 85.68 and a low of 85.98 against the greenback. The unit ended the session at 85.69 (provisional) against the dollar, registering a gain of 3 paise from its previous closing level.
On Tuesday, the rupee snapped its seven-session rally and settled with a loss of 11 paise at 85.72 against the US dollar.
“The Indian rupee gained strength following a short pause on Tuesday, driven by a resurgence of foreign fund inflows. In addition, foreign banks and exporters played a key role by increasing the supply of dollars into the market,” Dilip Parmar – Senior Research Analyst, HDFC Securities, said.
However, trading volumes remained subdued as market participants made necessary adjustments ahead of the fiscal year-end, Parmar noted.
“Looking ahead, the USD-INR spot is likely to encounter support near the 85.40 level, while facing resistance around the 86.25 mark,” he added.
Forex traders said geopolitical risks — from Israel’s offensive in Gaza to US air strikes on Iran-backed Houthi rebels — are driving demand for safe-haven assets like the US dollar.
Meanwhile, US President Donald Trump has threatened a 25 per cent tariff on countries purchasing oil and gas from Venezuela. This has pushed Brent crude prices, they added.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.03 per cent higher at 104.21.
Brent crude, the global oil benchmark, rose 0.63 per cent to USD 73.48 per barrel in futures trade.
In the domestic equity market, the 30-share BSE Sensex fell 728.69 points, or 0.93 per cent, to settle at 77,288.50, while the Nifty declined 181.80 points, or 0.77 per cent, to close at 23,486.85 points.
Foreign institutional investors (FIIs) purchased equities worth Rs 5,371.57 crore on a net basis on Tuesday, according to exchange data. (PTI)
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