Rupee Depreciates 23 paise to ₹85.73 Against US Dollar in Early Trade

The rupee depreciated by 23 paise to ₹85.73 against the US dollar in early trade on Wednesday, 2nd April, 2025. It was the opening day of the financial year 2025-26. On Friday, the rupee had settled at ₹85.50 against the US dollar, up 24 paise. On the interbank foreign exchange, the rupee opened at ₹85.65 against the greenback but dropped thereafter.

Reasons for Rupee Weakness

The rupee fall has been driven by surging prices for crude oil, and growing worries over the risk of reciprocal tariffs. Forex traders said the Indian rupee started weak on the reciprocal tariffs action by US President Donald Trump, which is being watched for its impact on the country. The imposition of tariffs on Indian goods could put more pressure on the rupee, but a relief from such tariffs would be supportive, according to Amit Pabari, managing director of CR Forex Advisors.

Fear of Retaliatory Tariffs

The rupee is also facing pressure from concerns that the US under President Trump will impose reciprocal tariffs. Trump has slammed New Delhi for imposing high tariffs on American goods and announced reciprocal tariffs to come into effect on April 2. Traders have been cautious of the potential impact of these tariffs on Indian goods. In anticipation of tariffs, a report today states that India will consider numerous contingency plans ahead of the Trump tariff deadline.

Analysis of Crude Oil Prices and Global Impacts

The rupee is getting weaker due to increasing prices of crude oil. International benchmark Brent crude was trading 0.03% higher at USD 74.51 per barrel in futures trade. The dollar index, which measures the US dollar against a basket of six currencies, was trading slightly down by 0.06 % at 104.19.

How is the Rupee Faring and What About Forex Reserves?

The rupee was trading at ₹83.42 per greenback on April 2, 2024, as the currency has weakened over 2 per cent in 2024-25 so far. But the rupee rose in March this year, by 2.17 per cent, the biggest gain since November 2018. India's forex reserves rose by USD 4.529 billion to USD 658.8 billion for the week ended on March 21. This was preceded by an increase of USD 305 million in the prior week, being the third straight weekly increase.

Market Reactions

In the domestic equity market, the 30-share BSE Sensex was up 203.90 points (0.27 per cent) at 76,228.41, while the Nifty gained 38.05 points (0.16 per cent) at 23,203.75 points. On Tuesday, however, FII were net sellers, bringing down equities worth ₹5,901.63 crore.

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