The Indian rupee fell by 7 paise to close at 95.83 against the US dollar on Thursday, extending losses from the previous session. On Wednesday, the rupee had depreciated by 40 paise to settle at 95.76 against the greenback.
Market Dynamics
The slight decline on Thursday was attributed to sustained demand for the US dollar from importers and foreign fund outflows. Traders also cited concerns over global economic uncertainty and rising crude oil prices, which put pressure on the domestic currency.
Factors Influencing the Rupee
Several factors contributed to the rupee's weakness, including:
- Strong US Dollar Index: The dollar remained firm against major currencies, supported by hawkish comments from Federal Reserve officials.
- Foreign Portfolio Outflows: Continued selling by foreign investors in Indian equity markets added to the rupee's woes.
- Crude Oil Prices: Elevated global oil prices increased India's import bill, weighing on the currency.
Meanwhile, the Reserve Bank of India (RBI) is likely intervening in the forex market to curb excessive volatility, though its actions were not immediately evident on Thursday.
Outlook
Analysts expect the rupee to trade in a broad range of 95.50 to 96.00 in the near term, with key triggers including US economic data and RBI policy decisions. The domestic currency has been under pressure this year due to global headwinds and a widening trade deficit.
On the domestic front, equity benchmarks ended lower on Thursday, with the BSE Sensex falling 0.3% and the NSE Nifty 50 declining 0.4%, reflecting weak investor sentiment.
