Rupee Falls 5 Paise to 90.23 Against US Dollar Amid Foreign Fund Outflows
The Indian rupee fell 5 paise to 90.23 against the US dollar in early Monday trade, pressured by rising crude oil prices and foreign fund outflows. Foreign institutional investors sold ₹3,769.31 crore worth of equities on Friday, while India's forex reserves declined $9.809 billion to $686.801 billion in the week ending January 2. Geopolitical uncertainties and concerns over potential US tariffs on Indian exports have contributed to the currency weakness and broader market volatility.
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The Indian rupee weakened against the US dollar in early trade on Monday, declining 5 paise to 90.23 amid multiple headwinds including rising crude oil prices and sustained foreign fund outflows. The currency opened at the interbank foreign exchange at 90.23, staying weaker from its previous closing level of 90.18.
Currency Performance and Market Dynamics
The rupee's decline follows a significant drop on Friday when it fell 28 paise to close at 90.18 against the US dollar. Forex traders attributed the weakness to volatile geopolitical conditions and growing concerns over potential US tariffs on Indian exports, which have fueled selling pressure from foreign institutional investors.
| Currency Metric: | Current Level | Change |
|---|---|---|
| Rupee vs USD: | 90.23 | -5 paise |
| Friday Close: | 90.18 | -28 paise |
| Dollar Index: | 98.75 | -0.14% |
Foreign Investment Outflows Impact Markets
Foreign institutional investors continued their selling spree, offloading equities worth ₹3,769.31 crore on Friday according to exchange data. This sustained outflow has been a key factor pressuring both the currency and domestic equity markets. The selling pressure reflects investor concerns about geopolitical developments and potential trade policy changes affecting Indian exports.
Forex Reserves Decline Significantly
India's foreign exchange reserves experienced a substantial decline in the week ending January 2, according to the latest weekly data released by the Reserve Bank of India on Friday. The reserves dropped by $9.809 billion to $686.801 billion, marking a significant reversal from the previous reporting week when reserves had jumped by $3.293 billion to $696.61 billion.
| Reserve Movement: | Amount |
|---|---|
| Current Reserves: | $686.801 billion |
| Weekly Decline: | $9.809 billion |
| Previous Week Gain: | $3.293 billion |
Commodity and Equity Market Movements
Brent crude, the global oil benchmark, was trading 0.13% higher at $63.44 per barrel in futures trade, adding to pressure on the rupee given India's significant oil import requirements. Meanwhile, the dollar index, which measures the greenback's strength against six major currencies, was trading 0.14% lower at 98.75.
Domestic equity markets reflected the broader negative sentiment, with the 30-share benchmark Sensex declining 356.49 points or 0.43% to 83,219.75. The Nifty dipped 94.90 points or 0.37% to 25,588.40, as investors remained cautious about global developments.
Geopolitical Factors Influence Sentiment
Analysts highlighted that several geopolitical factors are influencing global market sentiment, including developments related to Venezuela and Iran, as well as Trump's possible moves regarding Greenland. These uncertainties have contributed to the volatile trading environment and continued pressure on emerging market currencies including the rupee.
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