Rupee falls 6 paise to 85.78 against U.S. dollar in early trade

Rupee faces pressure from liquidity constraints, tariff concerns, and month-end demand, but supported by foreign fund inflows.

The rupee weakened by 6 paise to 85.78 against the U.S. dollar in early trade on Wednesday (Market 26, 2025), weighed down by a negative trend in domestic equities and the recovery of the American currency in the overseas market.

Forex dealers said the rupee faced renewed pressure on liquidity constraints, concerns over reciprocal tariff implementations and month-end demand for the U.S. currency from importers.

However, foreign fund inflows supported the rupee at lower levels.

At the interbank foreign exchange, the rupee opened at 85.71 against the greenback, then lost ground and touched 85.78, down 6 paise from its previous close.

On Tuesday, the rupee snapped its seven-session rally and settled with a loss of 11 paise at 85.72 against the U.S. dollar.

"RBI's $77.53 billion in short-side forward positions signals potential dollar-buying intervention, which could cap the rupee's gains. Additionally, geopolitical risks -- from Israel's offensive in Gaza to US air strikes on Iran-backed Houthi rebels -- are driving demand for safe-haven assets like the US dollar," CR Forex Advisors MD Amit Pabari said.

Meanwhile, the U.S. dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.12% higher at 104.30.