Rupee recovers from early losses, gains 17 paise to close at 85.41 against US dollar

The rupee rebounded from early losses and closed 17 paise higher at 85.41 (provisional) against the US dollar on Friday, aided by possible intervention from the Reserve Bank of India (RBI) to curb excessive depreciation.The domestic currency opened weak at 85.88 per dollar, amid heightened geopolitical tensions between India and Pakistan. During the session, the rupee fluctuated between a low of 85.88 and a high of 85.32 before settling at 85.41, recovering from Thursday’s sharp fall.The rupee had plunged 81 paise on Thursday—its steepest single-day decline in over two and a half years—to close at 85.58 against the dollar, weighed by fears stemming from a flare-up along the India-Pakistan border.“Indian rupee opened weak on Friday amid flaring up of geopolitical tensions across the border. Weak domestic markets and a rise in crude oil prices also weighed on the rupee,” said Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan. “However, the domestic currency recovered in the latter half of the day on reports of selling of dollars by the Reserve Bank of India as well as a correction in the US dollar index.”Tensions spiked after Pakistan launched multiple drone and missile attacks targeting military installations across Jammu, Pathankot, Udhampur, and other areas on the night of May 8–9. The Indian Army reported that the attempts were “effectively repulsed” and accused Pakistani troops of numerous ceasefire violations along the Line of Control in Jammu and Kashmir.Despite these tensions, the dollar index weakened 0.26% to 100.38, offering some relief to emerging market currencies. Brent crude, however, surged 1.80% to USD 63.97 per barrel, adding pressure on the rupee through import costs.Choudhary noted that the rupee may continue to face downward pressure in the near term due to rising crude oil prices, geopolitical uncertainty, and overall risk aversion. However, he said foreign institutional investor (FII) inflows and any de-escalation in border tensions could offer support.Meanwhile, Indian equities saw a sharp downturn, with the benchmark BSE Sensex falling 880.34 points or 1.10% to close at 79,454.47, and the NSE Nifty shedding 265.80 points to settle at 24,008.00.FIIs were net buyers in the equity market on Thursday, purchasing shares worth Rs 2,007.96 crore, according to exchange data.