Rupee Opens Weaker Against US Dollar For Third Day
The Indian rupee closed weak against the US dollar on Tuesday, slipping by 19 paise to settle at 86.53.
Rupee opened weaker against US dollar on Wednesday. It weakened by 5 paise to open at 86.58 against the US Dollar.
The domestic currency continued its downward trend against the US dollar on Tuesday as well, slipping by 19 paise to settle at 86.53. This was the second consecutive day of weakness for the rupee, which had shown signs of strengthening last week, closing 26 paise higher at 86.21 on Friday, according to Bloomberg data.
This depreciation comes amid ongoing concerns surrounding global economic factors and market movements. The Reserve Bank of India, in an attempt to support liquidity in the banking system, announced a series of special measures on Monday. These measures include open market operations purchases, longer-tenure variable rate repo auctions, and interventions in the foreign exchange market. These efforts are expected to infuse approximately Rs 1.5 lakh crore into the banking system, which could provide some relief to the rupee.
Despite these measures, the rupee remains under pressure, as exporters are advised to hedge small amounts near the 86.60 level, which is currently supported by the RBI. Meanwhile, importers are encouraged to buy on dips, according to Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP.
Bhansali also indicated that the expected opening for the rupee on Wednesday would be around 86.54, with the day’s range predicted to be between 86.40 and 86.70. The rupee has faced fluctuations in recent sessions as foreign portfolio investors continued to buy dollars to fund equity sales, which amounted to Rs 5,000 crore on Monday. The RBI’s support for the rupee has helped contain the slide to some extent, but the currency remains vulnerable to external factors.
In the global markets, Brent oil prices saw an uptick as investors weighed the potential impact of US tariffs on Canada and Mexico, while also responding to the increase in US weekly crude inventory. Brent oil was trading at $77.40 per barrel, but it fell to multi-week lows after news of surging interest in startup DeepSeek’s low-cost AI model raised concerns about the rising energy demands of powering data centers. Furthermore, weak economic data from China has dampened demand outlooks, contributing to overall market uncertainty, Bhansali said.
As global markets await the Federal Reserve's meeting outcome tomorrow, along with US GDP data, US PCE prices, and the European Central Bank's policy meeting, the rupee’s performance will be closely linked to these developments. The currency is expected to continue trading within a narrow range as traders await further clarity from these events, Bhansali added.
