Rupee Closes 41 Paise Lower Against Dollar Ahead Of RBI Policy

The rupee closed weaker against the US dollar on Tuesday, extending its losses from the previous session. Investors are expected to remain cautious ahead of the Reserve Bank of India's policy decision and they will continue to assess the impact of US tariffs.

The domestic currency weakened 41 paise to close at 86.25 per dollar after opening at 85.88. It had settled at 85.84 on Monday. During the session, the rupee briefly crossed the 86 mark to touch an intraday low of 86.08. Brent crude was up 0.05% at $64.24 per barrel, while the spot dollar index rose 0.08% to 103.3430.

The sharp moves seen earlier in global markets eased slightly on Tuesday, with investors in Asia turning to bargain-hunting while awaiting clarity on US President Donald Trump's tariff plans. Markets are watching for how Washington and its trading partners respond to the latest round of tariff escalation.

Traders will also shift focus to the RBI Monetary Policy Committee meeting on Wednesday. Governor Sanjay Malhotra's statement and press conference will be closely watched for any cues on how the central bank views the impact of Trump's 26% tariff on Indian exports. Most economists surveyed by Bloomberg expect a 25-basis point rate cut to 6%, while some anticipate a deeper cut or a change in policy stance to ‘accommodative'.

Meanwhile, in a report released Tuesday, Crisil Ratings warned that sharp rupee volatility could dent earnings of several sectors by up to 250 basis points in the next financial year. The most vulnerable include complex fertilisers, airlines, oil and gas, capital goods, pharmaceuticals, and renewable energy—sectors with high imported input costs and unhedged foreign debt exposure.