New Delhi, May 21, 2025 — The Indian rupee closed marginally lower by 1 paisa at 85.59 against the US dollar on Wednesday, weighed down by subdued domestic equity markets and persistent foreign fund outflows. The currency's movement remained range-bound as traders exercised caution ahead of the release of the U.S. Federal Reserve minutes and key domestic economic indicators.
Forex Market Overview
At the interbank foreign exchange market, the rupee opened at 85.55 and fluctuated between a high of 85.52 and a low of 85.61 against the greenback during intraday trade. It finally settled at 85.59 per dollar, registering a minor decline from the previous close of 85.58.
Forex traders attributed the slight depreciation to weak market sentiment amid global economic uncertainties and rising oil prices, which continue to pressure the Indian currency.
Factors Influencing Rupee Movement
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Crude Oil Prices: Global crude oil benchmarks remained elevated, fueling concerns over India’s trade deficit and inflation. India is a major importer of oil, and any surge in prices tends to weaken the rupee.
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Foreign Fund Outflows: Persistent selling by Foreign Institutional Investors (FIIs) in Indian equities has led to downward pressure on the rupee. According to market data, FIIs were net sellers in recent sessions.
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US Dollar Strength: The US dollar remained firm against a basket of major currencies as investors looked for safe-haven assets amid geopolitical concerns and anticipation around the Fed's next policy move.
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Muted Domestic Equities: The benchmark Sensex and Nifty ended flat, reflecting investor caution ahead of key economic data and global developments. The lack of strong domestic cues failed to provide support to the local currency.
Expert Commentary
Currency analysts suggest that the rupee is expected to remain under pressure in the near term as global macroeconomic uncertainties persist. “The rupee’s movement is closely linked to global risk sentiment and foreign capital flows. With the US Fed minutes and domestic GDP data on the horizon, volatility may increase in the coming sessions,” said a senior forex strategist at a leading brokerage firm.
Outlook
Looking ahead, the Indian rupee’s trajectory will be influenced by a combination of domestic economic indicators, global risk appetite, and commodity price trends. Analysts recommend closely monitoring central bank policies, particularly from the US Federal Reserve and the Reserve Bank of India (RBI), for further cues on currency movement.
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