The Indian rupee opened weaker against the US dollar on Wednesday, extending its recent losses in early trading sessions. The domestic currency declined by 4 paise to settle at 88.69 against the American currency during initial trading hours.
Market Opening and Trading Patterns
At the interbank foreign exchange market, the rupee commenced trading at 88.69 against the US dollar, marking a 4 paise decline from its previous close. This opening followed Tuesday's session where the domestic currency had settled at 88.65 against the American currency.
Forex traders identified multiple factors contributing to the rupee's weakness. The strengthening US dollar in international markets created significant pressure on emerging market currencies, including the Indian rupee. Simultaneously, foreign fund outflows from domestic equity markets added to the downward momentum.
Key Factors Influencing Currency Movement
The US dollar index, which measures the American currency against a basket of six major currencies, showed notable strength, trading 0.06 percent higher at 105.14. This dollar strength made imports more expensive and put pressure on currencies across emerging markets.
Global oil benchmark Brent crude futures also presented concerns for the Indian currency. The futures declined by 0.63 percent to $81.94 per barrel, though they remained at levels that continue to impact India's import bill significantly, given the country's substantial crude oil import requirements.
In domestic equity markets, the 30-share BSE Sensex showed some resilience, trading 21.01 points or 0.03 percent higher at 76,902.53 points. Similarly, the broader NSE Nifty advanced by 13.45 points or 0.06 percent to reach 23,411.95 points during early trading.
Foreign Investment Trends and Market Outlook
Foreign Institutional Investors (FIIs) emerged as net sellers in the capital markets on Tuesday. According to exchange data, FIIs offloaded shares worth ₹3,928.83 crore, contributing to the pressure on the Indian rupee. This selling activity reflected the ongoing cautious approach among foreign investors toward emerging market assets.
Market analysts suggested that the rupee is likely to trade within a narrow range in the coming sessions, with the central bank potentially intervening to prevent excessive volatility. The currency's movement remains sensitive to global dollar strength, crude oil price fluctuations, and foreign portfolio investment patterns.
Traders are closely monitoring economic data releases from both domestic and international markets, which could provide further direction to currency movements. The overall sentiment in Asian currencies also plays a crucial role in determining the rupee's trajectory against the US dollar.
