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    Rupee Ends Lower at 90.29 Against Dollar Amid Global Uncertainty and Foreign Outflows

    5 days ago

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    The Indian rupee weakened further against the U.S. dollar on Wednesday, closing 6 paise lower at 90.29 (provisional) in the interbank foreign exchange market. The domestic currency erased early gains and settled on a weaker note as global risk aversion, foreign fund outflows, and a firm U.S. dollar continued to weigh on investor sentiment.

    Market participants said that while expectations of possible central bank intervention provided some support to the rupee at lower levels, persistent global headwinds limited any sustained recovery during the trading session.

    Intraday Movement and Market Dynamics

    The rupee opened marginally stronger at 90.26 against the dollar, reflecting cautious optimism in early trade. During the session, it touched an intraday high of 89.94 before slipping to a low of 90.30, highlighting increased volatility in currency markets. Eventually, it ended the day at 90.29, registering a decline of 6 paise compared to its previous close.

    This followed a similar trend on Tuesday, when the rupee had also ended 6 paise lower at 90.23 against the U.S. currency, indicating continued pressure on the domestic unit.

    Key Factors Pressuring the Rupee

    Currency analysts attributed the rupee’s weakness to a combination of external and domestic factors. A strong dollar in global markets remained a major drag, as investors sought safety amid ongoing geopolitical developments and uncertainty across major economies.

    Foreign institutional investor (FII) outflows from Indian equity markets also contributed to the pressure. According to exchange data, overseas investors sold equities worth nearly ₹1,500 crore on Tuesday, adding to demand for the U.S. dollar and weakening the rupee.

    Elevated crude oil prices further weighed on the domestic currency, as India is a major importer of oil. Higher oil import costs tend to widen the trade deficit and increase dollar demand, putting downward pressure on the rupee.

    Central Bank Intervention in Focus

    Forex traders noted that expectations of intervention by the Reserve Bank of India (RBI) helped prevent sharper losses. Market participants believe that the central bank may step in to smooth excessive volatility if the rupee weakens significantly beyond current levels.

    Experts said that such interventions, if undertaken, could provide near-term support to the currency, especially during periods of heightened global uncertainty.

    Outlook Remains Cautious

    According to market analysts, the rupee is likely to trade with a negative bias in the near term due to risk aversion in global financial markets. Ongoing geopolitical tensions and uncertainty around global economic growth continue to influence currency movements.

    At the same time, traders are closely tracking global developments, including an upcoming decision by the U.S. Supreme Court related to the legality of certain trade tariffs. Such events have the potential to impact the dollar and emerging market currencies, including the rupee.

    Analysts expect the USD-INR spot rate to trade within a broad range of 89.95 to 90.50 in the short term, depending on global cues and capital flows.

    Global Market Indicators

    The dollar index, which measures the strength of the U.S. currency against a basket of six major currencies, was marginally lower, indicating mixed sentiment in global currency markets.

    Meanwhile, Brent crude oil prices eased slightly in futures trade, offering some relief. However, analysts cautioned that oil price volatility remains a concern and could quickly reverse any positive impact on the rupee.

    Domestic Equity Market Performance

    Domestic equity markets also reflected a cautious mood. The benchmark Sensex declined by nearly 245 points to close at 83,382.71, while the Nifty fell by about 67 points to settle at 25,665.60. Weakness in equities often leads to foreign fund outflows, which in turn affects the currency market.

    Market participants said that sustained selling in equities could continue to influence the rupee’s movement in the coming sessions.

    Looking Ahead

    Going forward, the rupee’s trajectory is expected to be shaped by global risk sentiment, movements in crude oil prices, and foreign investment trends. Expectations of easing inflation and the possibility of interest rate adjustments later in the year could provide some support, but external factors are likely to remain dominant.

     

    For now, traders and investors are bracing for continued volatility, with the rupee expected to remain sensitive to global economic developments and policy signals from major central banks.

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