Rupee slips for sixth session, ends at 86.41 amid strong dollar, FII outflows

Mumbai: The rupee continued its downward trend for the sixth straight session, closing 3 paise lower at 86.41 against the US dollar on Wednesday. The decline was primarily driven by a firm dollar and persistent outflow of foreign funds.

However, forex traders noted that the fall was partially offset by easing crude oil prices and robust buying in domestic equity markets, supported by global cues following the announcement of a trade agreement between the US and Japan.

At the interbank foreign exchange market, the rupee opened weaker at 86.46 and touched an intraday high of 86.34 before ending at 86.41—3 paise lower than Tuesday’s close of 86.38. On Tuesday, the currency had already dropped 7 paise, marking its fifth consecutive loss since July 16, when it had fallen by 16 paise to close at 85.92.

Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, attributed the rupee’s weakness to the strengthening dollar and continued selling by foreign institutional investors. However, he said the impact was softened by falling crude oil prices and gains in local stock markets.

“Traders will likely track the US PPI and industrial production data for cues. The USD-INR spot rate may stay within the range of ₹85.60 to ₹86.30,” he said.

The dollar index, which compares the greenback to six major currencies, edged up 0.04% to 97.16. Analysts believe the rise is linked to higher US inflation, which has dampened expectations of a rate cut by the Federal Reserve.

Brent crude, the international benchmark, dropped 0.52% to \$68.23 per barrel in futures trade.

Market experts say investors are closely watching the outcome of India-US trade negotiations as the August 1 deadline approaches. Any delay or breakdown in talks could result in higher US tariffs on Indian exports, putting further strain on the rupee.

The next round of trade discussions is expected to take place in India in August, following the conclusion of the fifth round last week in Washington.

Meanwhile, domestic stock markets saw a sharp rise, with the Sensex gaining 539.83 points (0.66%) to close at 82,726.64, and the Nifty climbing 159 points (0.63%) to settle at 25,219.90.

On the other hand, foreign institutional investors sold equities worth ₹3,548.92 crore on a net basis on Tuesday, as per exchange data.