Indian Currency Ends Sharply Lower Amid Global Risk-Off Sentiment

The Indian rupee depreciated by 60 paise to settle at 95.85 against the US dollar on Thursday, reflecting mounting pressure from global geopolitical developments and persistent foreign capital withdrawals.

According to forex market participants, heightened tensions in West Asia prompted investors to seek refuge in safer assets, boosting demand for the US dollar and strengthening the greenback against several emerging market currencies, including the rupee.

At the interbank foreign exchange market, the domestic currency opened at 95.55 per US dollar before extending its losses through the trading session. It touched an intraday low of 95.85, eventually closing at the day’s weakest level and marking a decline of 60 paise from its previous close.

Analysts attributed the rupee’s weakness to a combination of external and domestic factors. Continued foreign institutional investor (FII) outflows from Indian markets added to the pressure, while weak sentiment in the domestic equity markets further reduced support for the local currency.

A stronger US dollar, often viewed as a safe-haven asset during periods of geopolitical uncertainty, has also intensified the challenges facing emerging market currencies. Rising concerns over potential disruptions in global trade and energy supplies due to the West Asia situation have increased risk aversion among international investors.

Currency experts believe that the rupee’s near-term trajectory will depend on developments in the geopolitical landscape, trends in crude oil prices, the pace of foreign fund movements, and the Reserve Bank of India’s response to excessive volatility in the foreign exchange market.

With global uncertainties continuing to dominate investor sentiment, market participants are expected to closely monitor both international developments and domestic economic indicators for further cues on the rupee’s direction.