Rupee Weakens to 89.73 in Early Trade as FII Selling and Market Losses Weigh

The Indian rupee weakened by 5 paise to trade at 89.73 against the US dollar in early trade on Tuesday, pressured by continued foreign fund outflows and a soft opening in domestic equity markets.

Forex traders said that selling by foreign institutional investors (FIIs) and losses in benchmark indices such as the Sensex and Nifty weighed on the local currency. However, the decline in the rupee was limited due to a weaker US dollar and easing global crude oil prices.

At the interbank foreign exchange market, the rupee opened slightly stronger at 89.67 but soon slipped to 89.73, compared with its previous close of 89.68. On Monday, the rupee had ended marginally lower by 1 paisa after giving up early gains, as rising crude oil prices offset positive sentiment from equities.

Market participants noted that the rupee is likely to remain range-bound in the near term, with investors closely watching key US macroeconomic data, including employment figures, GDP growth, consumer confidence, and inflation indicators, ahead of the Christmas holiday period.

Meanwhile, the US dollar index slipped 0.20% to 98.08, reflecting a softer greenback against major global currencies. Brent crude oil prices also eased, trading 0.12% lower at USD 61.99 per barrel, providing some relief to the import-dependent Indian economy.

On the equity front, the Sensex fell 116.57 points to 85,450.91, while the Nifty declined 27.15 points to 26,145.25 in early trade. Exchange data showed that FIIs sold equities worth ₹457.34 crore on Monday, adding pressure to both markets and the currency.

Separately, a positive development on the trade front saw India and New Zealand announce the conclusion of negotiations for a free trade agreement. The pact is expected to provide duty-free access in New Zealand for several Indian products, including textiles, footwear, engineering goods, and marine products.

Originally published on 24×7-news.com.