Rupee rises 12 paise to 85.29 against U.S. dollar in early trade

Rupee strengthens against US dollar due to rising forex reserves, but geopolitical tensions may impact future stability.

The rupee appreciated 12 paise to 85.29 against the US dollar in early trade on Monday (April 28, 2025), supported by strong domestic fundamentals, such as rising forex reserves and healthy capital inflows.

Forex traders said a steady rise in reserves enhances India's import cover, providing a crucial buffer against external shocks and lending stability to the rupee.

However, the rupee could face pressure amid any escalation in tensions between India and Pakistan as geopolitical uncertainties like these tend to drive investors toward safer assets, causing outflows from emerging markets and weakening local currencies like the rupee.

At the interbank foreign exchange, the domestic unit opened at 85.29 against the greenback, registering a gain of 12 paise over its previous close.

In initial trade, the rupee also touched an early low of 85.42 against the greenback.

On Friday, the rupee settled lower by 8 paise at 85.41 against the US dollar.

"Looking ahead, USD/INR is expected to remain volatile. Strong domestic fundamentals, such as rising forex reserves and healthy capital inflows, are likely to support the rupee. However, persistent geopolitical tensions and global risk aversion could cap any meaningful appreciation," CR Forex Advisors MD Amit Pabari said.