The pressure has been compounded by persistent foreign institutional investor outflows. Overseas investors have continued to pull money out of Indian equities amid global uncertainty, further weakening the domestic currency.
The broader strength of the dollar has also contributed to the rupee’s decline. The dollar index, which measures the greenback against a basket of major currencies, remained firm in early trading.
On the domestic front, a sharp fall in equity markets added to the negative sentiment. Benchmark indices declined significantly in morning trade, reflecting investor concerns over global risks and rising volatility.
Market participants said the Reserve Bank of India had intervened intermittently to manage volatility, but allowed the rupee to adjust in line with market pressures. Expectations remain that the central bank may step in more actively if the depreciation accelerates further.
Meanwhile, India’s foreign exchange reserves have declined in recent weeks, adding another layer of concern for currency stability. The drop in reserves, coupled with sustained capital outflows and high import costs, has heightened pressure on the rupee.
Analysts expect the currency to remain volatile in the near term, with movements likely to be influenced by crude oil prices, global risk sentiment and the trajectory of capital flows.
With PTI inputs
