The Indian rupee opened 24 paise lower at 85.5238 against the US dollar on Monday, weakening from its previous close of 85.28. The dip comes amid rising global uncertainty surrounding tariffs and a lack of market momentum, even as the rupee had outperformed its Asian counterparts just a day earlier.
The dollar index, a gauge of the greenback’s strength against six major currencies, inched higher to 98.873 in early trade, up from 98.706 in the previous session. However, concerns remain over the index’s long-term direction, as policy ambiguity and fears of an expanding US fiscal deficit weigh heavily on investor sentiment.
Amit Pabari, Managing Director at CR Forex Advisors, pointed to the Trump administration’s renewed protectionist measures and erratic tariff threats as key reasons behind the global capital shake-up. “Institutional investors are rattled, with many pulling out of US equities and debt markets. This has led to a broad-based shift into safer or higher-yielding assets across the globe,” Pabari said.
He also noted that the dollar index is expected to trade within a narrow band, facing stiff resistance around the 99.80–100 levels, and could gradually ease toward 98 or even 97.50 in the coming sessions.
Despite Monday’s slip, some analysts see room for recovery. On June 2, the rupee had strengthened due to strong foreign inflows into Indian equities. Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors LLP, suggested that continued weakness in the dollar index combined with gains in other Asian currencies could propel the rupee back towards the 85 mark.
For now, investors and traders are expected to remain cautious, closely watching both global macroeconomic cues and domestic equity flows as the rupee charts its course in an uncertain landscape.