Indian Rupee extends slide to open at 85.59/$; FII inflows help cap decline

The Indian Rupee continued to weaken against the dollar on Thursday, though rising foreign inflows into equities helped cushion the impact of higher oil prices and a reviving dollar index.

 

The domestic currency opened 17 paise weaker at 85.59 after closing at 85.42 against the greenback on Wednesday, according to Bloomberg data. The currency fell for the third straight day, taking the monthly fall against the dollar to 0.16 per cent. 

 

The weaker sentiment for the Rupee also came due to heightened geopolitical tensions, following a terror attack in Pahalgam, Jammu & Kashmir, according to Amit Pabari, managing director at CR Forex Advisors. "This marks a significant geopolitical escalation and has injected fresh uncertainty into regional risk perception." 

 

The decline in the currency came amid mixed tariff signals from the US on the tariffs front. Optimism over potential tariff cuts on China cooled after US Treasury Secretary Scott Bessent clarified that President Donald Trump has not offered to reduce the levies unilaterally, despite reports suggesting the White House is considering slashing some tariffs by more than half. 

 

The US dollar index has surged from its recent low of 97.92 to 99.94, marking a notable comeback driven by optimism around a potential de-escalation in US-China trade tensions, Pabari noted. The dollar index — a measure of the value of the US dollar relative to a basket of foreign currencies — was down 0.21 per cent at 99.63, as of 9:10 AM IST. 

 

Meanwhile, India's private sector growth rose to an eight-month high in April fueled by robust demand, particularly a surge in foreign orders for manufactured goods. However, business confidence showed some signs of softening. Foreign portfolio investors continued to buy equities for the sixth consecutive day on Wednesday. Global funds bought stocks worth ₹3,332.93, taking the four-day purchase to over ₹21,200 crore.  

 

The Reserve Bank of India (RBI) will be keenly watched while geopolitical tensions in the sub-continent rose due to Pahalgam attacks by terrorists the day before yesterday, Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said. The Rupee is expected to remain in a range of 85.25/85.75 with upticks to the dollar getting sold off as unhedged exporters hedge their currency receivables while importers have already hedged their near-term positions, he said. 

 

Crude oil prices advanced Thursday with investors weighing a potential OPEC+ output increase amid mixed tariff signals. Brent crude oil was up 0.12 per cent to $66.20 per barrel, while WTI crude was up 0.10 per cent at 62.33 per barrel as of 9:20 AM IST.