Rupee Slips to 85.39/$ on Crude Spike, Dollar Strength; Traders Eye Fed Signals

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The Indian rupee opened 8 paise lower at ₹85.39 per US dollar on July 4, 2025, compared to the previous close of ₹85.31, reflecting renewed pressure from rising crude oil prices and a stronger greenback following upbeat US jobs data.

Key Highlights:

- Opening Dip: The rupee weakened by 0.1% at open, tracking a rebound in the US dollar index and higher US Treasury yields after non-farm payrolls beat expectations.

- Crude Oil Impact: Brent crude rose over 3% this week, nearing $69/barrel, increasing India’s import bill and weighing on the rupee.

- Dollar Dynamics: The dollar index climbed to 97.01, buoyed by strong US labor market data and reduced expectations of a Fed rate cut in July.

- Market Range: Analysts expect the rupee to trade between 85.25–85.75 in the near term, with 85.00 acting as key support and 85.90–86.00 as resistance.

- FPI Outflows: Foreign portfolio investors sold Indian equities worth ₹2,589 crore on July 3, adding to rupee pressure.

- Domestic Data Watch: India’s HSBC Manufacturing PMI fell to a 3-month low of 57.6, while Q4 GDP growth remained strong at 7.4%, offering mixed cues.

- Technical Outlook: Traders anticipate a potential rebound toward 85.00 if crude stabilizes and FPI flows return. However, any escalation in global trade tensions or Fed hawkishness could push the rupee closer to 86.

The rupee’s near-term trajectory hinges on global risk sentiment, crude trends, and the Fed’s next move—making July a critical month for currency watchers.

Source: Business Standard, The Hindu, Economic Times