Rupee slips 15 paise to 89.90 against dollar in early trade

The Indian Rupee weakened by 15 paise to 89.90 against the US dollar in early trade on Wednesday, weighed down by sustained foreign fund outflows, strong dollar demand from importers, and a cautious start in domestic equity markets.

At the interbank foreign exchange market, the local currency opened at 89.89 against the dollar and slipped further to 89.90, compared to its previous close of 89.75 on Tuesday, when it had gained 23 paise.

Forex traders said the rupee came under pressure as foreign portfolio investors continued to offload Indian equities, leading to increased dollar demand. Importers were seen buying dollars near the 89.80 to 90.00 levels, while exporters remained cautious and held back on selling, anticipating more favourable rates closer to the 90 mark. The imbalance between dollar demand and supply kept the rupee under strain in early trade.

Anil Kumar Bhansali , Head of Treasury and Executive Director at Finrex Treasury Advisors LLP , said ongoing US India trade uncertainties and persistent FPI selling have been weighing on the currency. He noted that with inflation remaining on the lower side, the rupee currently lacks strong interest rate support, and only consistent foreign inflows could help it move into an appreciating phase. He added that importers may buy on dips, while exporters could consider selling near higher levels.

Dealers said foreign investor outflows are likely to persist in the near term as elevated US interest rates continue to support the dollar and limit risk appetite for emerging market currencies. They added that a sustained recovery in the rupee would depend on moderation in US yields, revival of foreign inflows into Indian equities and bonds, and stable crude oil prices. Until then, the rupee is expected to remain range bound with a weak bias near current levels.

Meanwhile, the dollar index , which measures the greenback’s strength against a basket of six major currencies, edged up 0.04 per cent to 98.27. Brent crude , the global oil benchmark, slipped 0.08 per cent to USD 61.30 per barrel.

In the domestic equity market, the Sensex rose 188.31 points to open at 84,863.39, while the Nifty gained 80.70 points to 26,009.55. Foreign institutional investors sold equities worth Rs 3,844.02 crore on Tuesday, according to exchange data.