Mumbai: The Indian rupee weakened for the second straight session on Wednesday, closing 29 paise lower at 85.90 (provisional) against the US dollar. The decline was largely driven by persistent foreign fund outflows, heightened geopolitical tensions, and firm crude oil prices, according to forex dealers.
The rupee opened the day at 85.69 at the interbank foreign exchange market and fluctuated between a high of 85.69 and a low of 86.05 before settling at 85.90. This marks a cumulative loss of 51 paise over the past two trading sessions, with the currency having closed at 85.61 on Tuesday.
Currency experts attributed the downward pressure to ongoing tensions between Russia and Ukraine, which have stoked global risk aversion. In addition, the uptick in international oil prices has raised concerns over India's import bill, further weighing on the rupee.
Investors are also treading cautiously ahead of the Reserve Bank of India’s (RBI) monetary policy decision, scheduled for June 6. The central bank's Monetary Policy Committee began its three-day deliberation on Wednesday. Market participants are closely watching for potential rate cuts. Some analysts anticipate a 25 basis point cut, while SBI Research suggests a more aggressive 50 basis point reduction might be on the cards this month to stimulate growth.
In the broader currency markets, the dollar index—measuring the greenback’s strength against six major currencies—dropped 0.12% to 99.11. Meanwhile, Brent crude, the global oil benchmark, rose 0.41% to USD 65.90 per barrel, further impacting sentiment.
In domestic markets, the equity benchmark BSE Sensex ended 260.74 points higher at 80,998.25, while the NSE Nifty shed 77.70 points to close at 24,620.20. On the institutional front, foreign investors offloaded Indian equities worth Rs 2,853.83 crore on Tuesday, reflecting risk-off sentiment.
On the macroeconomic side, India’s services sector showed stable growth. The HSBC India Services PMI inched up to 58.8 in May from 58.7 in April, indicating strong demand, increased client wins, and improved hiring.
