Mumbai | Economy India | The Indian rupee traded in a narrow range on Tuesday and settled 6 paise lower at 90.95 (provisional) against the US dollar, pressured by a stronger greenback, rising crude oil prices, and sharp weakness in domestic equity markets.
Forex traders said lingering uncertainty over the India–US trade deal weighed on investor sentiment, while intermittent foreign fund inflows helped limit deeper losses in the local currency.
Narrow Range Trading Due to Possible RBI Intervention
At the interbank foreign exchange market, the rupee opened at 90.91 against the US dollar and moved within a tight band of 90.91 to 90.97 during the session. Market participants attributed the restricted movement to possible intervention by the Reserve Bank of India, aimed at preventing excessive volatility.
The rupee finally ended the session at 90.95 (provisional), down 6 paise from its previous close.
Key Factors Pressuring the Rupee
Currency traders highlighted multiple headwinds for the rupee:
- Firm US Dollar: Strength in the dollar index continued to weigh on emerging market currencies, including the rupee.
- Rising Crude Oil Prices: Higher global oil prices increased concerns over India’s import bill and current account balance.
- Equity Market Weakness: A sharp fall in domestic equity indices triggered risk-off sentiment, impacting the local unit.
- Trade Deal Uncertainty: Ongoing ambiguity surrounding the India–US trade negotiations added to market caution.
Foreign Inflows Provide Partial Support
Despite the pressure, foreign institutional inflows into Indian markets offered some cushion to the rupee. Analysts said sustained inflows could help stabilise the currency in the near term, even as global factors remain challenging.
Outlook
Market participants expect the rupee to remain range-bound in the short term, with movements driven by global dollar trends, crude oil prices, and clarity on trade-related developments. The RBI’s stance on currency management is also likely to play a crucial role in determining near-term direction.
Economy India View:
The rupee’s muted movement reflects a balance between external pressures and central bank intervention, with global cues continuing to dominate currency markets.
(Economy India)
