Indian Rupee Closes Weak Against US Dollar Amid Global, Domestic Pressures
Rupee's performance remains under pressure, mainly due to ongoing demand for the US dollar and global uncertainties.
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The Indian rupee weakened by 11 paise to close at 84.45 against the US dollar on Wednesday, compared to its previous close of 84.34 on Tuesday. This slight decline in the currency reflects the ongoing fluctuations in the foreign exchange market.
The rupee opened weak by 5 paise at 84.39 against the US dollar on Wednesday morning, following a close of 84.34 on Tuesday.
The rupee had slipped by six paise on Tuesday, closing at 84.34 after opening flat earlier in the day. This followed a slight recovery on Monday when the rupee appreciated by 17 paise to settle at 84.28.
The rupee's performance remains under pressure, mainly due to ongoing demand for the US dollar and global uncertainties. Analysts had predicted a weaker outlook for the domestic currency, particularly after a brief period of inflows that helped it close higher on Monday.
On Wednesday, the rupee was expected to open around 84.36, with the day’s trading range seen between 84.25 and 84.45, according to Anil Kumar Bhansali, head of treasury at Finrex Treasury Advisors LLP. Exporters may continue to hold back from selling, setting a stop-loss at 84.25, as the rupee remains in a weakening trend due to sustained dollar demand, he said, adding that importers are likely to take advantage of any dips in the rupee to purchase dollars.
The rupee’s slide on Tuesday by about 4 paise to close at 84.3275 followed a period of inflows from the MSCI rebalance, but global factors, such as former President Donald Trump’s import levies on three countries, further weighed on market sentiment.
Rupee could remain within a broad range of 84.00 to 84.50 in the near term, as markets await key economic data from the US later in the day, Bhansali said.
Adding to the pressure on the rupee, global funds offloaded Rs 5,321 crore worth of Indian equities on Thursday, taking the total net outflow to Rs 1.65 lakh crore over the past 37 sessions. Additionally, the ongoing Russia-Ukraine conflict has exacerbated global market uncertainty, further impacting currencies worldwide.
Despite these challenges, the Reserve Bank of India has been actively intervening to stabilise the rupee. Measures, including interventions in the non-deliverable forward market and selling dollars, have been aimed at supporting the domestic currency amidst global volatility.
