Indian Rupee Declines Amid Global Economic Pressures

Rupee Hits New Low Against US Dollar

Mumbai, May 15: On Friday, the Indian rupee dropped below the significant 96-per-dollar mark during intraday trading, facing mounting pressure from a robust US dollar, escalating crude oil prices, and ongoing foreign fund withdrawals.

Forex analysts indicated that the currency is experiencing strain due to ongoing capital outflows, diminished foreign direct investment (FDI) inflows, and global uncertainties that are negatively affecting investor confidence.

“The USD/INR pair is under pressure due to persistent foreign capital exits and weak net FDI inflows, which are impacting India’s balance of payments,” noted a participant in the forex market.

In the interbank foreign exchange market, the rupee commenced trading at 95.86 against the US dollar but quickly weakened, reaching an intraday low of 96.14, reflecting a decline of approximately 50 paise from the previous close. It concluded Thursday’s trading session at 95.64, having gained a slight 2 paise after earlier fluctuations.

Market analysts pointed out that global factors are intensifying the pressure on Asian currencies, including hawkish remarks from US officials and stronger-than-anticipated US economic indicators.

Currency traders noted that uncertainty surrounding global growth and inconsistent capital flows have also led to the depreciation of emerging market currencies.

“Asian currencies have weakened following hawkish signals from US policymakers and mixed global indicators, including geopolitical and trade uncertainties,” stated Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP.

The US dollar index, which gauges the dollar against six major currencies, increased by 0.47 percent to 99.28, further pressuring the rupee. Concurrently, Brent crude oil prices surged by 3.20 percent to USD 109.20 per barrel in futures trading, raising concerns over India's import expenses.

On the domestic stock market front, indices also showed weakness. The Sensex fell by 130.74 points or 0.17 percent to 75,267.98, while the Nifty dropped by 17.60 points or 0.07 percent to 23,672.00.

However, Foreign Institutional Investors (FIIs) turned net buyers on Thursday, acquiring equities worth Rs 187.46 crore, as per exchange data.

In macroeconomic updates released on Friday, Commerce Secretary Rajesh Agrawal reported that India’s exports increased by 13.78 percent year-on-year in April, reaching USD 43.56 billion, demonstrating resilience despite global challenges.

Imports also rose by 10 percent to USD 71.94 billion, resulting in a trade deficit of USD 28.38 billion for the month.

Globally, market sentiment remained cautious amid ongoing geopolitical and trade developments.

Chinese President Xi Jinping and US President Donald Trump described their discussions on Friday as "historic" and "landmark," concluding the American leader's three-day visit on a positive note, although no agreements on contentious issues were reached.