Rupee Falls to 85.73 vs Dollar: Concerns Over Tariffs

Mumbai, Apr 2 (PTI) The rupee depreciated 23 paise to 85.73 against the US dollar in early trade on Wednesday, weighed down by rising crude prices and escalating concerns over reciprocal tariffs.

Forex traders said the Indian rupee opened on a weak note on Wednesday, the first trading session of the fiscal year 2025-26, over Trump's reciprocal tariffs concerns with investors watching out for how it will affect the country.

At the interbank foreign exchange, the rupee opened at 85.65 against the greenback, then lost ground and touched 85.73, down 23 paise from its previous close.

On Friday, the rupee appreciated 24 paise to close at 85.50 against the US dollar.

This is the first trading session of the financial year 2025-26. On April 1, the currency and bond markets are closed on Tuesday for the annual account closing of banks.

On March 31, stock, money, commodity and derivative markets will remain closed on account of Eid-Ul-Fitr.

In the financial year 2024-25, the rupee has depreciated more than 2 per cent. On April 2, 2024, it was quoted at 83.42 against the US dollar.

In March this year, the local unit appreciated 2.17 per cent, the maximum since November 2018 when the local unit had registered a gain of over 5 per cent.

"All eyes will be on the imposition of reciprocal tariffs. Any imposition of tariffs on Indian goods could put additional pressure on the rupee, while relief from such tariffs would provide much-needed support to the currency," CR Forex Advisors MD Amit Pabari said.

US President Donald Trump has repeatedly criticised the high tariffs charged by India and other countries on American goods. He plans to roll out a set of reciprocal tariffs on April 2, which he says will be "Liberation Day" for the US.

Pabari further added that, driven by rising crude prices and escalating concerns over reciprocal tariffs, the rupee is expected to find strong support around 85.50-85.60, with a potential rebound towards 86.00-86.20 levels.

The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.06 per cent lower at 104.19.

Brent crude, the global oil benchmark, rose 0.03 per cent to USD 74.51 per barrel in futures trade.

In the domestic equity market, the 30-share BSE Sensex rose 203.90 points, or 0.27 per cent, to 76,228.41, while the Nifty advanced 38.05 points, or 0.16 per cent, to close at 23,203.75 points.

Foreign institutional investors (FIIs) turned sellers and offloaded equities worth Rs 5,901.63 crore on a net basis on Tuesday, according to exchange data.

Meanwhile, the country's forex reserves jumped by USD 4.529 billion to USD 658.8 billion during the week ended March 21, the RBI said on Friday.

In the previous reporting week, the overall reserves had increased by USD 305 million to USD 654.271 billion.

This is the third consecutive week of rise in the kitty, which has been on a declining trend recently due to revaluation, along with forex market interventions by the RBI to help reduce volatilities in the rupee.