The Indian rupee fell 15 paise to 94.48 against the US dollar in early trade on Monday, extending its losses from the previous session. The decline was driven by a strong greenback in overseas markets and risk-averse sentiment among investors.
Rupee Opens Lower
At the interbank foreign exchange market, the rupee opened at 94.35 and then slipped to 94.48, registering a fall of 15 paise over its previous close. On Friday, the rupee had pared most of its initial gains and settled higher by 7 paise at 94.33 against the US dollar.
Factors Behind the Drop
Forex traders attributed the rupee's weakness to the strength of the US dollar against major currencies. The dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.1% to 104.20. Additionally, concerns over global economic slowdown and geopolitical tensions dampened investor appetite for riskier assets, including emerging market currencies like the rupee.
Market Sentiment
According to analysts, the rupee is expected to remain under pressure due to sustained foreign fund outflows and rising crude oil prices. Brent crude futures, the global oil benchmark, climbed 0.5% to $85.60 per barrel, adding to India's import bill and weighing on the currency.
Domestic Equity Markets
On the domestic equity front, the 30-share BSE Sensex was trading 120 points lower at 62,450 in early trade, reflecting negative cues from global markets. The broader NSE Nifty also declined by 35 points to 18,600. Foreign institutional investors (FIIs) remained net sellers in the capital market, offloading shares worth ₹1,200 crore on Friday, according to exchange data.
Outlook
Market participants are closely watching the Reserve Bank of India's (RBI) intervention in the forex market to curb volatility. The central bank's actions and any further movement in the dollar index will likely dictate the rupee's trajectory in the near term. The rupee has been under pressure this year, with the currency depreciating over 5% against the dollar since January.
