85.75 and Steady—India’s Currency Finds Balance Amid Global Flux

Image Source: Indira Securities

India's money markets began on Tuesday with a small gain to the rupee, which rose 0.1% to 85.75 against the US dollar, from the previous close of 85.85. The action comes after a string of liquidity operations by the Reserve Bank of India (RBI) and defensive sentiment in advance of global tariff deadlines.

Major Currency Movement:

The rupee opened at 85.75/USD, ending a nineday streak and exhibiting mild strength in spite of mounting external pressures on the dollar.
Oil importers' demand for dollars at monthend and corporate hedging had been previously bearing down on the currency.

RBI's Liquidity Snapshot as of July 7, 2025:

RBI balances with banks were ₹9.31 trillion, indicating good liquidity in the system.
The central bank carried out ₹59.87 billion of refinance business, allowing shortterm finance needs.
No government surplus funds were available for sale, which implied tight fiscal positioning or coordinated spending planning.
Banks borrowed ₹10.51 billion from the Marginal Standing Facility (MSF), a marginal rise which shows overnight liquidity needs in the absence of system pressure.

Market Implications:

The rupee is under pressure due to global trade uncertainties, particularly after the July 9 US tariff announcement.
The currency is likely to remain in the 85.5086.00 band in the near term with RBI intervention likely in case volatility picks up.

Investor Sentiment:

US economic data and oil price action are what traders are seeking guidance from.
RBI calibrated liquidity support suggests a stability bias as opposed to aggressive easing.

Sources: Reuters, Economic Times, Investment Guru India, Wall Street Journal