The Indian rupee weakened by 4 paise to settle at 89.20 (provisional) against the US dollar on Tuesday, primarily due to negative signals from domestic equity markets.
While falling crude oil prices provided some support to the rupee at lower levels, persistent outflows of foreign funds exerted pressure on the currency, according to forex analysts.
In the interbank foreign exchange market, the rupee opened at 89.02 and experienced an intra-day low of 89.27 before concluding the session at 89.20 (provisional), reflecting a decline of 4 paise from its previous closing level. On Monday, the rupee had strengthened significantly, closing 50 paise higher at 89.16, following a steep drop of 98 paise that brought it to a lifetime low of 89.66 against the dollar on Friday.
Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, noted that positive trends in domestic markets and declining crude oil prices contributed to the rupee’s initial strength. However, a robust US dollar and foreign institutional investor (FII) outflows restricted sharper gains.
Choudhary stated, “We anticipate the rupee will trade with a slight negative bias due to importer demand for dollars and foreign outflows. Nevertheless, the weaker tone in crude oil prices and positive global markets may offer some support at lower levels. Renewed discussions regarding potential rate cuts by the Federal Reserve could introduce volatility. The USD-INR spot price is expected to fluctuate within the range of ₹89 to ₹89.50.”
Meanwhile, the dollar index, which measures the strength of the US dollar against a group of six major currencies, declined by 0.06% to 100.01.
In the global oil market, Brent crude, a key benchmark, fell by 0.49% to $63.06 per barrel in futures trading.
On the domestic front, the Sensex dipped by 313.70 points, or 0.37%, to close at 84,587.01, while the Nifty index decreased by 25,884.80 points, or 0.29%, to 25,884.80.
According to exchange data, foreign institutional investors sold equities valued at ₹4,171.75 crore on a net basis on Monday.
