The rupee opened on the backfoot on Wednesday after closing sharply lower in the previous session, as traders turned cautious ahead of the Reserve Bank of India's first monetary policy decision for financial year 2026.
The unit weakened 20 paise to open at 86.45 against the US dollar, compared to its previous close of 86.25. Brent crude was down 2.79% at $61.07 per barrel, while the spot dollar index slipped 0.55% to 102.3900.
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“The rupee saw a strong depreciation of 38 paise on Tuesday despite favourable cues like falling crude and a softening dollar. Domestic liquidity actions and external shocks, particularly the weakening yuan, pulled it lower,” said Amit Pabari, managing director, CR Forex Advisors.
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Pabari pointed to the RBI's Rs 20,000 crore open market operation as a key trigger for Tuesday's sharp fall. “The liquidity tilt sparked immediate depreciation, while the yuan's plunge to its weakest level since the global financial crisis added pressure.”
Traders are bracing for the RBI's policy decision, where a 25 basis point rate cut is widely expected. “The rate cut and liquidity infusion may increase the rupee's supply and pressurise it in the near term, but could boost spending and support growth in the medium term,” said Pabari.
The rupee may face strong resistance around 86.40–86.50 levels, while 85.70 will act as key support.
Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP, pegged the day's range between 86.00 and 86.60. “Exporters may sell cash/nearby exports near 86.50, while importers can wait for 85.50 to hedge,” he said.
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