The rupee dipped to 90.09 against the US dollar, shrugging off RBI’s recent rate cut. Is it rising crude prices, foreign fund outflows, or trade deal uncertainty keeping the currency under pressure? Experts say markets remain on tenterhooks.
Rupee slips to 90.09 against dollar
New Delhi: The Indian rupee depreciated by 14 paise to close at 90.09 (provisional) against the US dollar on Monday, reflecting ongoing pressures in the foreign exchange market.
Analysts attributed the fall to a combination of elevated crude oil prices, persistent foreign fund outflows, and continued importer demand for the American currency. Market participants said these factors have dented investor sentiment, keeping the domestic currency under pressure.
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The rupee opened the interbank forex market at 90.07 against the US dollar. During the day, it weakened further, touching an intra-day low of 90.26, down 31 paise from its previous close.
However, by the end of trading, it recovered slightly to settle at 90.09. Traders noted that sustained foreign capital outflows from equities and lingering uncertainty regarding the India-US trade deal added to market nervousness, limiting the rupee’s recovery.
On Friday, the rupee had closed at 89.95 against the US dollar, following the Reserve Bank of India’s decision to reduce its key policy interest rate for the first time in six months.
Despite the rate cut, which is generally seen as supportive for domestic growth, the rupee’s weakness on Monday highlights that external pressures and global market dynamics continue to dominate currency movements.
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Reserve Bank of India Governor Sanjay Malhotra reiterated that the central bank does not target any specific band for the rupee in the forex market. “We allow the domestic currency to find its correct level,” he said on Friday, emphasizing that the RBI’s focus remains on broader economic stability rather than short-term currency interventions.
With crude oil prices remaining high and foreign portfolio investors continuing to withdraw from Indian equities, the rupee is likely to face further volatility in the near term.
Analysts advise that sustained importer demand for the US dollar, coupled with global geopolitical uncertainties and trade negotiations, could continue to weigh on the domestic currency. Market participants will closely watch any fresh developments in trade talks with the US and oil price movements to gauge the rupee’s trajectory.
