Rupee Ends At Over Four-Month Low Against Dollar Amid Global Uncertainty

The Indian rupee closed at its lowest level in over four months on Tuesday, ending the session at Rs 86.82 against the US dollar, down 15 paise from Rs 86.67 a day ago.

This marks the weakest closing level for the currency since March 13, reflecting persistent pressure from global risk-off sentiment and foreign fund outflows.

"Exporters are likely to wait and watch, while importers may look to hedge and buy for cash at the day's lowest level,” said Anil Bhansali, Head executive director at Finrex Treasury Advisors LLP.

Global cues added to the rupee’s weakness. Brent crude prices, which had climbed following a US-EU trade deal, slipped in Asia trade amid renewed geopolitical tensions. President Donald Trump announced a shortened deadline for Russia to end its war in Ukraine, threatening further sanctions and signaling a shift in European energy dependence toward US producers.

Meanwhile, the dollar strengthened, buoyed by easing trade war concerns and anticipation around the upcoming Federal Reserve meeting. The dollar index rose, and the US 10-year yield also edged higher although Bhansali cautioned that the dollar’s rally may be short-lived.

"Relief for the battered currency is not likely as a potentially less hawkish Federal Reserve is now the main threat,” he said. “Markets are not braced for fireworks at the July meeting.”

With only 16% odds priced in for a rate cut at the Fed’s Sept. 16 meeting, currency markets remain on edge. The rupee’s decline also coincides with continued foreign-portfolio-investor selling in Indian equities, further weighing on sentiment.