The rupee recovered from record low level and closed 15 paise higher at 87.73 (provisional) against the U.S. dollar on Wednesday (August 6, 2025), supported by a volatile greenback and the Reserve Bank’s decision to hold interest rate steady.

However, increasing crude oil prices, negative domestic equity markets, and uncertainties around the U.S. tariff on India restricted gains in the local unit, according to forex traders.

At the interbank foreign exchange, the domestic unit opened at 87.72 and moved in a range of 87.63-87.80 during the day before settling at 87.73 (provisional), up 15 paise from its previous close.

The rupee revisited its lowest-ever intra-day level and ended with a loss of 22 paise at 87.88 against the US dollar on Tuesday.

After three successive interest rate cuts, the Reserve Bank of India (RBI) on Wednesday decided to keep policy rate unchanged at 5.5% and retained the neutral stance, amid concerns over tariff uncertainties.

Announcing the third bi-monthly monetary policy of the current fiscal, RBI Governor Sanjay Malhotra said the growth rate projection for FY26 has been retained at 6.5 per cent.

“The rupee was in the narrow range with RBI protecting one end and FPIs buying for their dollar outflows, along with oil companies, before the due date of US secondary sanctions on Russia day after tomorrow [Friday],” Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said.

“We wait for the penal tariffs US applies on India for purchasing oil from Russia as the rupee traverses through a narrow path today with something positive in the mind. For tomorrow, we expect rupee in the range of 87.25/88.00,” he said.

Meanwhile, Brent crude prices rose 1.45% to $68.62 per barrel in futures trade.

The dollar index, which gauges the greenback’s strength against a basket of six currencies, was up marginally 0.01% to 98.79 after falling overnight.

In the domestic equity market, the 30-share BSE Sensex declined 166.26 points to settle at 80,543.99, while the Nifty went down 75.35 points to close at 24,574.20.

Foreign institutional investors (FIIs) offloaded equities worth ₹22.48 crore on a net basis on Tuesday, according to exchange data.