The Indian Rupee declined 6 paise to settle at 90.29 against the US dollar on Wednesday, reversing early gains as market pressures outweighed likely central bank intervention. The currency faced headwinds from a strengthening dollar, significant foreign outflows from capital markets, and elevated crude oil prices.

Trading Session Overview

The rupee's trading session reflected the volatile market conditions, with the currency experiencing significant intra-day movements before settling lower.

Market Pressures and Intervention

Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, noted that the Indian Rupee gained in early trade on likely central bank intervention. However, the positive momentum was capped by multiple factors including a strong dollar, foreign institutional investor outflows, and a late decline in domestic markets.

The currency's performance reflected the ongoing challenges faced by emerging market currencies amid global uncertainties. Foreign institutional investors offloaded equities worth ₹1,499.81 crore on Tuesday, adding to the pressure on the rupee.

Global Market Indicators

Global market conditions provided a mixed backdrop for currency trading, with key indicators showing varied movements.

Domestic Equity Market Performance

Domestic equity markets witnessed selling pressure, contributing to the overall negative sentiment for the rupee.

Market Outlook

Forex traders expect the rupee to trade with a negative bias due to risk aversion in global markets and ongoing geopolitical tensions. However, analysts suggest that rising odds of a rate cut amid softening inflation and potential central bank intervention may provide support at lower levels.

Choudhary indicated that the USDINR spot price is expected to trade in a range of 89.95 to 90.50, with traders focusing on the US Supreme Court ruling on the legality of Liberation Day tariffs as a key market catalyst.

The Indian rupee declined 6 paise to close at ₹90.29 against the US dollar on Wednesday, paring initial gains as market pressures outweighed likely central bank intervention. The currency faced headwinds from a strengthening dollar, foreign capital outflows, and rising crude oil prices, continuing its recent weakness against the greenback.

Trading Session Performance

During the interbank foreign exchange session, the rupee demonstrated significant volatility across a wide trading range. The currency opened at ₹90.26 and experienced substantial intraday movement before settling at its closing level.

Market Pressures and Analysis

Anuj Choudhary, Research Analyst at Mirae Asset ShareKhan, explained that while the Indian rupee gained in early trade due to likely central bank intervention, several factors capped sharp gains. "A strong dollar, FII outflows and a late fall in the domestic markets" contributed to the currency's decline, according to Choudhary's assessment.

Foreign institutional investors continued their selling pressure, offloading equities worth ₹1,499.81 crore on Tuesday according to exchange data. This sustained outflow pattern has been weighing on the rupee's performance in recent sessions.

Global Market Indicators

Key international market indicators showed mixed movements that influenced rupee trading:

The dollar index, which measures the greenback's strength against six major currencies, traded marginally lower at 99.11. However, Brent crude futures declined 1.04% to $64.81 per barrel, providing some relief from energy import costs.

Domestic Equity Market Impact

Domestic equity markets also faced selling pressure, which contributed to the rupee's weakness. The benchmark indices recorded notable declines during the trading session.

Market Outlook

Choudhary expects the rupee to trade with a negative bias due to risk aversion in global markets and ongoing geopolitical tensions. However, he noted that rising odds of a rate cut amid softening inflation and potential central bank intervention may provide support at lower levels.

Traders are focusing on the US Supreme Court ruling on the legality of Liberation Day tariffs, which could influence market sentiment. The USDINR spot price is expected to trade in a range of ₹89.95 to ₹90.50, according to market analysis.