The Indian rupee depreciated by 24 paise to 94.25 against the US dollar in early trade on Friday, reflecting persistent foreign fund outflows and a cautious mood in domestic equity markets.
Rupee Opens Lower
At the interbank foreign exchange market, the domestic unit opened at 94.25 and remained at that level in early deals, registering a loss of 24 paise from the previous closing level of 94.01. The rupee's decline was in line with weakness in Asian currencies, as the dollar index remained elevated on expectations of aggressive rate hikes by the US Federal Reserve.
Factors Behind the Slide
Forex traders cited sustained selling by foreign portfolio investors and a negative trend in domestic equities as key reasons for the rupee's fall. The benchmark BSE Sensex dropped over 300 points in early trade, while the Nifty50 slipped below the 17,800 mark. Additionally, crude oil prices hovering near $110 per barrel added to concerns over India's import bill and current account deficit.
Market Outlook
Analysts expect the rupee to remain under pressure in the near term due to global headwinds, including tightening monetary policy by central banks and geopolitical tensions. The Reserve Bank of India's intervention through dollar sales may provide some support, but the currency could test lower levels if foreign outflows continue. Traders are also awaiting cues from the US GDP data and Fed commentary later in the week.
The rupee had closed at 94.01 against the dollar in the previous session. On a weekly basis, the currency has lost nearly 50 paise, reflecting the broader weakness in emerging market currencies.
