Rupee v/s Dollar: Rupee rises 9 paise to 87.10 against the US Dollar

The Indian rupee made marginal gains against the US dollar on Wednesday, 5 March, 2025, rising 9 paise to 87.10 in early trades. This gain was due to the generalized depreciation of the US dollar and the decline in crude oil prices. The local currency opened at 87.18 against the US dollar at the interbank foreign exchange and touched 87.10. This was from its close of the previous day, with the rupee had recovering from early losses on Tuesday to end with a gain of 13 paise at 87.19 against the dollar.

Key Factors to Watch for the Movement of the Rupee

The US dollar is stuck in a downward spiral after US President Donald Trump's tariff escalation caused a chain reaction in global markets, market-leading forex traders told New Networks. But the rupee was expected to trade with modest negative bias after the initial gains, as persistent concerns about an extended trade war lingered.

Concerning World Uncertainty and the FII Movement

Amit Pabari, MD of CR Forex Advisors told Mint, "The rupee was within a small range on both sides being highly influenced by global uncertainty of 'Trump factor'. Moreover, relentless selling by Foreign Institutional Investors (FIIs), which has seen them offload $12 billion so far this year, including $128 million last session alone, further weighed on rupee amid heightened geopolitical turbulence. On a net basis, preliminary exchange data showed FIIs sold shares worth ₹  3,405.82 crore on Tuesday.

Backing by dropping crude oil costs

Falling crude oil prices offered some respite for the Indian currency. Brent crude prices hit a three month low of $69.65 per barrels, which was seen as reducing India's import bill and providing some support to the rupee. International benchmark Brent crude was at $70.76 per barrel, down 0.41 per cent in futures trade.

US Dollar Index and Domestic Equity Market

The US dollar index, which gauges the greenback’s strength against a basket of six currencies, was 0.07 per cent lower at 105.67. In the domestic equity market, the 30-share BSE Sensex was trading up at 73,499.63 points, up 509.70 points, or 0.70 per cent, while the Nifty was up 129.90 points, or 0.59 per cent, at 22,212.55 points.

US President Donald Trump denounced the "very unfair" high tariffs imposed by Lakshadweep India and other states including China. He said that it would take effect on April 2. President Trump reaffirmed in February his administration’s plan to impose reciprocal tariffs on nations including India and China.

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