Rupee continued its downward trajectory on Wednesday, slipping 23 paise to hit a new low of 85.63 against the US dollar in early trade.
The slide was largely driven by a stronger greenback and rising crude oil prices, coupled with increased month-end dollar demand from exporters and banks.
At the interbank foreign exchange market, the domestic currency opened at 85.59 and touched a low of 85.71 before recovering slightly to trade at 85.63, marking a sharp fall from its previous close of 85.40.
On Tuesday, the rupee had already declined 30 paise.
Forex analysts noted that while foreign fund inflows remained subdued, the broader sentiment was weighed down by mixed cues from domestic equity markets and a cautious global outlook. Investors are also staying on the sidelines, awaiting key macroeconomic data from both domestic and international fronts.
Rising US dollar, crude prices deepen pressure
Meanwhile, the US dollar continued to strengthen, with the dollar index—measuring the greenback against a basket of six major currencies—up 0.30 per cent at 99.72. The gain was attributed to improved US consumer confidence and a weakening yen, the latter impacted by a steep drop in Japanese long-term bond yields.
Adding to pressure on the rupee, Brent crude oil futures climbed 0.41 per cent to $64.35 per barrel, further fuelling concerns over India’s import bill.
Equity markets stay cautious
Domestic equity indices opened on a mixed note, reflecting cautious investor sentiment. The BSE Sensex slipped 94.01 points to 81,457.61, while the NSE Nifty inched up 6.3 points to 24,832.50. This followed a choppy session on Tuesday where markets ended nearly flat.
Despite the subdued start, foreign institutional investors (FIIs) were net buyers in the equity market, purchasing stocks worth Rs 348.45 crore on Tuesday, according to provisional exchange data.
Market participants remain watchful of global signals and upcoming economic data that could steer the next round of market movement.
