Foreign exchange market experts say that on one hand, the market is under pressure due to continuous selling by foreign institutional investors, while on the other hand, the sluggishness in the domestic stock markets is also hindering the strengthening of the rupee.
Rupee collapses again against US dollar, why is it weakening despite RBI intervention?
Rupee vs Dollar: The Indian rupee has been experiencing a steady decline in recent days, and this appears to be directly linked to foreign capital inflows and the trend in domestic stock markets. In early trading on Tuesday, the rupee fell five paise to 89.73 against the US dollar, after previously opening at 89.67.
Why is the rupee falling?
Foreign exchange market experts say that while continued selling by foreign institutional investors is putting pressure on the market, the sluggishness in domestic stock markets is also hindering the rupee's strength. However, weakness in the dollar index and falling international crude oil prices have provided some support to the rupee at lower levels.
The rupee failed to hold on to its early gains on Monday, closing marginally lower at 89.68 per dollar, as a rally in the stock market eroded support due to a surge in crude oil prices. The dollar index, which gauges the greenback's position against six major currencies, fell 0.20 percent to 98.08, but weakness in domestic markets weighed on the rupee.
What do experts say?
In the stock market, the Sensex fell 116.57 points to 85,450.91 in early trading, and the Nifty slipped 27.15 points to 26,145.25. Brent crude oil also traded marginally lower by 0.12 percent at $61.99 per barrel. Market data also showed that foreign institutional investors remained net sellers on Monday, selling shares worth ₹457.34 crore, further increasing pressure on the rupee.
Experts believe that the rupee may receive some relief in the coming days from a weak dollar and potential strength in domestic markets, but delays in the India-US trade deal and global uncertainties could keep pressure on the upside. According to analysts, the spot dollar-rupee rate is expected to remain in the range of 89.20 to 89.80 for the time being, with investors keeping an eye on key global economic data, including US GDP.
