The rupee closed at 85.60 against the U.S. dollar, down 0.1% from its close at 85.51 in the previous session.
Asian currencies rose with the Taiwanese dollar leading gains with a 1.6% rise while the offshore Chinese yuan rose 0.2%. The dollar index, meanwhile, fell 0.4% to 98, its lowest level in over a month.
The rupee was unable to benefit from a broadly weaker dollar in the face of dollar bids from local companies and foreign banks, likely on behalf of custodial clients, traders said.
The local currency has been a laggard among its regional peers over 2025 as well, with analysts citing India’s external investment deficit among the hurdles that have held it back.
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On the day, India’s benchmark equity indexes, the BSE Sensex and Nifty 50, fell about 1% each on the day, as ambiguity over the U.S-China trade deal and rising Middle East tensions dampened risk appetite. Crude oil prices pulled back on the day after rising over 4% in the previous session in light of Iran’s threat to strike U.S. bases in the Middle East region if nuclear talks fail. “Higher oil prices are a dollar positive by way of the U.S. comparative advantage in energy independence,” ING Bank said in a note.
“Any further developments here could see the dollar favoured for its liquidity – although the yen and Swiss franc would be in demand too,” ING said.
Dollar-rupee forward premiums, meanwhile, ticked up on the back of a rise in bets on a rate cut by the U.S. Federal Reserve in September after data released on Wednesday showed that U.S. consumer prices rose less-than-expected in May.
