Rupee Ends Stronger Against Dollar

The Indian rupee was stronger by 19 paise to close at 85.39 against the US dollar on Monday in comparison to its previous close of 85.58 on Friday. This significant appreciation comes amid various global and domestic economic factors influencing the currency markets.

The domestic currency opened four paise stronger at 85.54 against the US dollar.

The Rupee is expected to find immediate support near 85.00-85.20 levels and could gradually move towards 85.80-86.00 levels in the near term.

Additionally, the US dollar softened on Monday as the dollar index fell to 99.18 levels, giving back some gains as the market weighed the outlook of Trump's tariff policies and their potential to restrict growth and increase inflation. The US currency has been whip-sawed for weeks by Trump's off-and-on trade war, falling when a flare-up in tensions stokes worries of a potential US recession.

"The US dollar has recently declined following protectionist policies, a desire for a weaker dollar, and recent tax legislation. This uncertainty has led to a sell-off by institutions holding US equities and debt, further impacted the dollar," said Dilip Parmar, senior research analyst, HDFC Securities.

"While the markets remained distracted by the buzz around Trump’s latest tariff moves and rising geopolitical heat, the Indian Rupee became Asia’s worst-performing currency in May, slipping by 1.1% to close near 85.47 in the offshore NDF market," said Amit Pabari, managing director at CR Forex Advisors.

Crude rebounded more than a dollar at $64.27 per barrel on Monday after OPEC+ decided to increase output in July by the same amount as it did in the earlier months in line with the market expectations.

"All eyes will be on the RBI’s MPC meeting where a 25-bps rate cut is expected this week as part of its pro-growth strategy, which could cap any strong appreciation in the near term. A dovish RBI, in the face of global tightening concerns, is likely to keep the rupee under pressure," said Pabari.