The Indian rupee weakened by 23 paise to reach 85.73 against the U.S. dollar in early trade on Wednesday, April 2, 2025. This decline was primarily driven by rising crude oil prices and escalating concerns over reciprocal tariffs imposed by the U.S. administration. Forex traders noted that the rupee’s weak opening on the first trading session of the fiscal year 2025-26 reflected cautious sentiment among investors, particularly due to apprehensions surrounding U.S. President Donald Trump’s proposed tariff measures.
At the interbank foreign exchange market, the rupee initially opened at 85.65 against the dollar before losing ground to touch 85.73, marking a 23-paise decline from its previous closing level of 85.50 on Friday. The trading session on April 1 remained closed due to the annual account closing of banks, making this the first day of forex market activity for the new fiscal year.
Market analysts attributed the rupee’s depreciation to global economic factors, including a surge in crude oil prices and concerns over trade tensions. Brent crude, the international oil benchmark, saw a slight rise of 0.03% to $74.51 per barrel in futures trading, adding pressure to the rupee. Meanwhile, the U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was down 0.06%, trading at 104.19.
A key concern among investors is President Trump’s aggressive stance on trade policies. He has long criticized India and other nations for imposing high tariffs on American goods. His administration is set to introduce a series of reciprocal tariffs starting April 2, a move he has described as “Liberation Day” for the United States. Any imposition of tariffs on Indian exports could exert additional pressure on the rupee, while relief from such measures might provide the currency with much-needed support.
Amit Pabari, MD of CR Forex Advisors, noted that with rising crude prices and ongoing trade concerns, the rupee is expected to find strong support around the 85.50-85.60 levels. However, if the downward pressure persists, the local currency could weaken further towards the 86.00-86.20 range.
On the domestic front, the equity markets showed positive momentum despite the rupee’s weakness. The BSE Sensex rose by 203.90 points, or 0.27%, closing at 76,228.41, while the Nifty 50 index advanced 38.05 points, or 0.16%, ending at 23,203.75. However, foreign institutional investors (FIIs) turned net sellers, offloading equities worth ₹5,901.63 crore on Tuesday, signaling cautious investor sentiment.
Meanwhile, India’s foreign exchange reserves increased by $4.529 billion to reach $658.8 billion for the week ending March 21, as per the Reserve Bank of India (RBI). This marks the third consecutive weekly rise in forex reserves, despite recent declines due to RBI interventions aimed at reducing volatility in the rupee.
With global uncertainties and domestic economic factors influencing the currency’s trajectory, market participants will closely monitor the rupee’s movement in response to geopolitical and trade developments in the coming days.