Rupee slips to 89.97 against dollar amid FII outflows, weak equities

The Indian rupee weakened further in early trade on Friday, slipping 7 paise to 89.97 against the US dollar , pressured by sustained outflows by foreign institutional investors , rising global crude oil prices, and weak sentiment in domestic equity markets.

Forex traders said the local currency remained under stress as foreign institutional investors continued to sell equities amid concerns over possible fresh tariff measures by the United States. These global uncertainties, coupled with a stronger US dollar, added to the downward pressure on the rupee. At the interbank foreign exchange market, the rupee opened at 88.88 against the dollar but soon drifted lower to 89.97, compared to its previous close of 89.90 on Thursday.

Market participants also pointed to sharp volatility in the currency market on the previous day. According to Anil Kumar Bhansali , Head of Treasury and Executive Director at Finrex Treasury Advisors LLP , the Reserve Bank of India intervened by selling dollars near the 89.99 level, briefly supporting the rupee up to 89.73. However, renewed dollar buying by foreign portfolio investors later reversed those gains. He noted that the RBI’s efforts to cap sharp dollar appreciation have resulted in oversold positions, which may keep the dollar well-supported at lower levels as the central bank looks to balance its positions.

Globally, the dollar index, which tracks the greenback against a basket of six major currencies, was trading flat at 98.93. Meanwhile, Brent crude oil prices rose 0.53 per cent to USD 62.32 per barrel, adding to concerns for India, which is heavily dependent on oil imports.

Domestic equity markets also opened on a weak note, reflecting cautious investor sentiment. The benchmark Sensex slipped 78.84 points to 84,102.12, while the Nifty declined 21.50 points to 25,850.85. Exchange data showed that foreign institutional investors offloaded equities worth ₹3,367.12 crore on Thursday, reinforcing pressure on both equities and the rupee.

Overall, analysts believe the near-term outlook for the rupee will remain cautious, with global cues, crude oil prices, US policy signals, and foreign fund flows continuing to play a decisive role in currency movements.