MUMBAI: The Indian rupee is expected to open nearly unchanged on Tuesday but traders reckon that the currency will trade with an upward bias in the near term as concerns about U.S. trade and fiscal policies continue to cast a shadow on the greenback.
The 1-month non-deliverable forward indicated an open in the 85.07-85.10 range, versus 85.0850 in the previous session.
The rupee climbed to a two-week high of 84.79 on Monday but shed some of its gains in the face of dollar bids from a large state-run bank and local oil companies, traders said.
Dollar bids from oil companies are likely to persist since crude prices are attractive right now but “upticks (on USD/INR) are likely to get sold into,” a trader at a Mumbai-based bank said.
On the day, the dollar index was hovering just shy of the 99-handle while Asian currencies were flat to slightly higher.
In the near term, the rupee is expected to fluctuate between 84.60 and 85.30, said Dilip Parmar, a foreign exchange research analyst at HDFC Securities.
The greenback is on course to log its fifth consecutive monthly decline against major peers and is down nearly 9% in 2025 so far, as appetite for U.S. assets diminished amid a flurry of policy changes.
Indian rupee set to extend rally, riding momentum in Asia FX
Analysts have also pointed to a pick-up in demand for hedging against U.S. dollar weakness, which has added to the greenback’s troubles.
“The ongoing changes create the opening for a ’global euro moment,” ECB President Christine Lagarde said on Monday, referring to the troubles confronting the dollar. The euro has strengthened nearly 10% this year so far and was last at 1.14.
Analysts at DBS Bank also pointed out in a note on Friday that China has adopted “a controlled and targeted approach in May to promote a larger international role for the CNY,” as global confidence in the dollar wanes.
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