The Indian rupee fell 10 paise to 94.86 against the US dollar in early trade on Wednesday, extending its losses from the previous session. The domestic currency opened at 94.86, compared to its previous close of 94.76, weighed down by a strong American currency and cautious investor sentiment.
Rupee under pressure amid global headwinds
Forex traders said the rupee was under pressure due to the strengthening of the US dollar overseas and risk aversion in global markets. The dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.1% to 106.20, making emerging market currencies like the rupee less attractive.
On Tuesday, the rupee had declined 13 paise to close at 94.76 against the US dollar, marking its weakest level in recent weeks. The continuous depreciation reflects persistent demand for the dollar from importers and foreign portfolio outflows.
Market factors influencing the rupee
According to analysts, the rupee's movement is being driven by multiple factors, including crude oil prices, domestic equity market trends, and foreign fund flows. Brent crude, the international oil benchmark, traded near $85 per barrel, adding to concerns about India's import bill.
Foreign institutional investors (FIIs) remained net sellers in the capital market, offloading shares worth ₹1,200 crore on Tuesday, according to exchange data. This sustained selling pressure has contributed to the rupee's weakness.
Domestic equity markets show mixed trends
Meanwhile, domestic equity benchmarks opened on a mixed note. The BSE Sensex traded 50 points higher at 78,450, while the NSE Nifty was up 15 points at 23,820. However, broader market sentiment remained cautious amid global uncertainties.
Traders are also eyeing the Reserve Bank of India's (RBI) intervention in the forex market. The central bank is expected to step in to prevent excessive volatility, though its ability to stem the rupee's decline may be limited given the strong dollar trend.
Outlook for the rupee
Market participants expect the rupee to trade in a range of 94.50 to 95.00 against the dollar in the near term, with further weakness possible if the dollar continues to strengthen. The rupee has depreciated nearly 4% so far in 2026, making it one of the worst-performing Asian currencies.
"The rupee is likely to remain under pressure due to the strong dollar and elevated crude oil prices. However, any intervention by the RBI could provide some support," said a forex dealer at a public sector bank.
