Rupee Falls to 85.49/USD as Markets Eye RBI Policy; May GST Crosses ₹2 Lakh Crore

📉 Rupee Declines as Market Waits for RBI’s Decision

The Indian rupee opened lower on Tuesday, slipping by 10 paise to 85.49 against the U.S. dollar in early trade. According to forex traders, this dip is primarily driven by the cautious sentiment prevailing in domestic equity markets ahead of the Reserve Bank of India’s (RBI) monetary policy announcement due on June 6, 2025.

The RBI’s Monetary Policy Committee (MPC) began its bi-monthly deliberations on June 4, with economists expecting the central bank to maintain a status quo on the repo rate amid ongoing concerns around inflation and global economic uncertainty.

The rupee's decline was also influenced by mild strengthening of the U.S. dollar index, global risk aversion, and demand for safe-haven assets, particularly after recent geopolitical tensions and weaker-than-expected data from China and Europe.

💰 GST Collection Crosses ₹2 Lakh Crore Mark Again

In more positive economic news, India's Goods and Services Tax (GST) collections continued to demonstrate strength. May 2025 recorded ₹2.01 lakh crore in gross GST revenue, marking a 16.4% year-on-year increase. This is the second consecutive month that collections have crossed the ₹2 lakh crore threshold — a strong sign of resilience in consumption and improved tax compliance.

The May collections included ₹37,200 crore in Central GST (CGST), ₹42,400 crore in State GST (SGST), ₹1.05 lakh crore in Integrated GST (IGST), and ₹16,000 crore in cess.

📊 What’s Weighing on the Markets?

Volatile domestic equity markets are creating a ripple effect on forex sentiment. The BSE Sensex and NSE Nifty opened marginally lower as investors await clarity from the RBI on:

• Interest Rate Direction: Will the RBI signal future rate cuts?

• Inflation Outlook: Retail inflation has moderated but remains above the central bank’s comfort zone.

• Liquidity Measures: The central bank’s stance on liquidity infusion or tightening will impact borrowing costs and credit availability.

The RBI’s last few policies have emphasized a "withdrawal of accommodation" stance, prioritizing inflation control while supporting growth. However, with signs of moderation in inflation and pressure from global economic slowdown, the tone of this policy will be closely scrutinized by investors, economists, and business leaders.

🌍 Global Factors at Play

Internationally, the U.S. Federal Reserve’s stance on interest rates, ongoing geopolitical tensions in the Middle East and Eastern Europe, and fluctuations in oil prices have kept emerging market currencies, including the rupee, under pressure.

Foreign institutional investors (FIIs) have turned net sellers in Indian equities in recent sessions, further adding to the rupee’s weakness.

📌 Conclusion: A Crucial Week for Indian Economy

This week is shaping up to be crucial for India’s economic trajectory. While the falling rupee raises import costs and inflationary concerns, the strong GST collections offer a counterbalance by reflecting underlying economic momentum.

All eyes are now on the RBI’s June 6 announcement, which could offer clues into how India plans to navigate its economic path amid global and domestic challenges.

📈 Quick Snapshot:

• Rupee vs USD: ₹85.49 (down 10 paise)

• GST Collection May 2025: ₹2.01 lakh crore (16.4% YoY growth)

• RBI Policy Outcome: Scheduled for June 6, 2025

• Key Market Concerns: Inflation, interest rates, global risk.