The rupee declined by 15 paise in early trade on Wednesday, opening at a weaker 89.90 against the US dollar. This drop continues a trend influenced by foreign fund movements and domestic market sentiment. The currency’s movement reflects ongoing pressures in the forex market.
Forex traders pointed directly to sustained selling by foreign portfolio investors. These outflows have been a persistent weight on the Indian rupee for several months now. The trend shows no immediate sign of reversal, keeping traders cautious.
At the interbank foreign exchange, the rupee opened at 89.89 before slipping further. This placed it 15 paise lower than its previous closing level. The day’s trading began on a soft note for the local unit.
Just a day earlier, the rupee had managed to gain 23 paise, closing at 89.75. The volatility highlights the sensitive nature of the currency to daily capital flows. Market participants are closely watching every shift.
Anil Kumar Bhansali of Finrex Treasury Advisors provided key insights. He cited US-India trade uncertainties as a background factor. Foreign portfolio investors have pulled out a massive USD 16.5 billion from equities this year.
This substantial outflow increases demand from importers seeking dollars. It also makes exporters more cautious about selling their foreign earnings. The combined effect creates a downward pressure on the rupee.
Bhansali further explained the interest rate dynamic. With inflation on the lower side, the rupee lacks a strong interest rate incentive to appreciate. The currency needs consistent positive inflows to change its trajectory.
For daily strategy, he advised importers to buy on dips. Exporters, meanwhile, could look to sell as the rupee approaches the 90.00 level. This practical guidance stems from the current market setup.
Meanwhile, the dollar index saw a marginal increase of 0.04 percent. It was trading at 98.27, gauging the greenback against a basket of six major currencies. A stronger dollar often adds to the rupee’s challenges.
Global oil benchmark Brent crude futures traded slightly lower. It was down 0.08 percent at USD 61.30 per barrel. Oil price movements are always a critical factor for India’s import bill and currency stability.
Domestic equity markets presented a contrasting picture at the open. The Sensex opened 188.31 points higher at 84,863.39. The Nifty also rose, gaining 80.70 points to reach 26,009.55.
This positive equity opening did not immediately support the rupee. The divergence between stock indices and the currency is notable. It underscores that different forces are driving each market.
Exchange data revealed significant selling pressure from foreign institutional investors. They offloaded equities worth Rs 3,844.02 crore just on Tuesday. This consistent selling is a primary driver of the rupee’s weakness.
The rupee’s path seems tied directly to the actions of foreign investors. Their continued exit from Indian equities creates a steady headwind. Until this flow reverses, appreciation may remain difficult.
Market watchers will monitor for any shift in foreign portfolio investor sentiment. Inflows are the key catalyst needed for a sustained recovery. For now, the trend points toward cautious trading and strategic hedging.