The Indian rupee weakened by 11 paise to 94.95 against the US dollar in early trade on Monday, pressured by a negative trend in domestic equity markets and persistent foreign capital outflows.
Market Sentiment
Forex traders said the local unit opened on a weak note as the dollar index strengthened against major currencies overseas. Moreover, sustained selling by foreign institutional investors (FIIs) weighed on the rupee.
At the interbank foreign exchange market, the rupee opened at 94.95 against the greenback, registering a decline of 11 paise from its previous close of 94.84.
Domestic Equities
The benchmark BSE Sensex fell 250 points to 57,800 in early trade, while the NSE Nifty slipped 75 points to 17,200. The negative opening in equities dampened investor sentiment, adding pressure on the rupee.
Foreign Fund Outflows
Foreign institutional investors were net sellers in the capital market on Friday, offloading shares worth Rs 1,200 crore, as per exchange data. This trend has continued in the current session, further impacting the rupee's movement.
Global Factors
The dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.15% to 104.20. Meanwhile, Brent crude futures, the global oil benchmark, traded 0.5% higher at $82.50 per barrel, raising concerns about India's import bill.
Outlook
Analysts expect the rupee to trade in a range of 94.50 to 95.50 against the dollar in the near term, with the Reserve Bank of India likely intervening to prevent sharp volatility. The central bank's monetary policy stance and global cues will remain key drivers.
