The Indian rupee opened slightly higher but remained steady above the Rs 84 mark, impacted by ongoing foreign fund outflows from domestic equities and bonds. Despite this, persistent dollar selling by state-run banks, acting on behalf of the Reserve Bank of India (RBI), helped limit further depreciation of the currency.
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The rupee opened at Rs 84.07 against the US dollar, slightly up from the previous close of Rs 84.06 on Monday. The Indian currency managed to maintain stability amid significant selling pressure from foreign institutional investors (FIIs).
Foreign investors have sold Indian stocks for the 11th consecutive day, primarily due to the revival of Chinese markets and concerns regarding valuations. Over these eleven days, FIIs have offloaded stocks worth over Rs 73,100 crore, while domestic investors have purchased stocks totaling Rs 73,600 crore, as indicated by provisional data from the National Stock Exchange.
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Following its inclusion in JPMorgan Chase & Co.’s emerging-market bond index, Indian sovereign bonds faced their first weekly outflow. Despite RBI’s efforts to support the rupee around the Rs 84.08 level, persistent dollar demand from foreign portfolio investors and oil companies continues to apply downward pressure.
The US dollar index has shown signs of recovery, approaching 103, further exerting pressure on the rupee. Nonetheless, with a combination of RBI interventions and favorable global trends, there is potential for the rupee to gradually return to the Rs 83.80 mark.
