The Indian rupee experienced significant weakness on Friday, declining by 26 paise to settle at 90.16 against the US dollar in provisional closing rates. The local currency faced headwinds from multiple global and domestic factors, including rising crude oil prices and continued foreign fund outflows amid heightened geopolitical tensions.

Trading Session Performance

The rupee's trading session reflected the challenging market conditions, with the currency showing initial strength before succumbing to broader pressures.

According to Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, the rupee opened higher at 89.88 but weakened as domestic stock markets declined, falling to 90.25 during the session. The market awaited the US Supreme Court's decision on tariffs, which could potentially impact Indian stocks and the rupee in subsequent trading sessions.

Global Market Factors

Several international factors contributed to the rupee's decline, with commodity prices and dollar strength playing key roles in the currency's performance.

The dollar index, measuring the greenback's strength against six major currencies, traded 0.11% higher at 99.04, adding pressure on emerging market currencies including the rupee. Simultaneously, Brent crude futures rose 0.56% to $62.34 per barrel, creating additional concerns for India's import-dependent economy.

Market Outlook and Analysis

Research analysts expect continued challenges for the rupee in the near term, with multiple factors likely to influence its trajectory. Anuj Choudhary, Research Analyst at Mirae Asset ShareKhan, noted that the rupee is expected to trade with a negative bias due to geopolitical tensions leading to risk aversion in global markets. The combination of US dollar strength and surging crude oil prices may continue pressuring the local currency.

Foreign institutional investor outflows remain a significant concern, with FIIs offloading equities worth ₹3,367.12 crores on Thursday according to exchange data. However, analysts suggest that potential central bank intervention could provide support at lower levels.

Domestic Equity Market Impact

The currency weakness coincided with significant selling pressure in domestic equity markets, reflecting broader investor sentiment.

Traders are expected to monitor upcoming economic data, particularly the non-farm payrolls report from the US, for further direction. The USDINR spot price is anticipated to trade within a range of 89.90 to 90.60, according to market analysts.