The Indian rupee weakened sharply on Monday, falling 56 paise to settle at 95.74 against the US dollar, as risk aversion swept through global markets and weighed on investor sentiment.
Rupee Reverses Gains
Forex traders noted that the domestic currency erased all the gains made in the previous trading session, succumbing to renewed demand for the safe-haven US dollar. The rupee opened lower and continued to decline throughout the day, breaching the 95.50 level before closing near the day's low.
Global Factors at Play
The depreciation was largely attributed to heightened risk aversion in international markets, triggered by concerns over global economic growth and geopolitical tensions. Investors sought refuge in the US dollar, pushing the greenback higher against major currencies and emerging market peers.
Additionally, a sell-off in domestic equities added pressure on the rupee, as foreign portfolio investors pulled out funds from Indian markets. The benchmark BSE Sensex and NSE Nifty both ended in negative territory, reflecting the cautious mood.
Market Outlook
Analysts expect the rupee to remain under pressure in the near term, with the dollar index hovering near multi-month highs. The Reserve Bank of India's intervention in the forex market may provide some support, but sustained foreign outflows and global headwinds could keep the currency volatile.
The rupee's fall comes amid a broader trend of weakness in Asian currencies, as the US Federal Reserve's hawkish stance continues to attract capital towards dollar-denominated assets. Traders are now awaiting key economic data from the US for further cues on the direction of interest rates.
