Rupee slips 18 paise to 93.94 against US dollar amid foreign fund outflows

The rupee declined 18 paise to 93.94 against the US dollar in early trade on Wednesday, weighed down by sustained foreign fund outflows and lingering uncertainty surrounding the West Asia crisis. 

Forex traders said persistent capital outflows kept investor sentiment cautious, though a sharp decline in global crude oil prices, a weaker US dollar, and a strong opening in domestic equities helped limit deeper losses in the local currency. 

At the interbank foreign exchange market, the rupee opened at 93.94 against the greenback, down 18 paise from its previous close, and continued to trade at that level in early deals. On Tuesday, the domestic unit had settled 23 paise lower at 93.76 per dollar. 

The dollar index, which measures the greenback against a basket of six major currencies, was trading 0.15% lower at 99.28. 

Meanwhile, domestic equity benchmarks extended their rally. The Sensex surged 1,161.61 points, or 1.57%, to 75,230.06, while the Nifty climbed 372.85 points, or 1.63%, to 23,285.25, supported by easing crude prices and positive cues from Asian markets amid hopes of de-escalation in the West Asia conflict. 

Brent crude, the global oil benchmark, was trading 4.4% lower at $99.89 per barrel in futures trade. 

Rajeev Sharan, Head of Research at Brickwork Ratings, said commodity markets saw a sharp correction last week, with both oil and gold retreating from recent highs. He noted that Brent crude, after nearing $101 per barrel, dropped more than 10% to around $91 per barrel, easing concerns over India’s oil import bill, current account deficit, and pressure on the rupee. 

He added that international gold prices also fell over 10%, marking one of the steepest weekly declines in decades, although they remain over 40% higher year-on-year. For India, Sharan said, every $10 per barrel change in crude oil prices typically impacts the current account deficit by 0.3–0.5 percentage points of GDP and raises CPI inflation by 20–30 basis points, depending on the extent of pass-through. 

While the recent moderation in commodity prices offers temporary relief and reduces downside risks for the rupee after it briefly slipped past the 93-mark, he cautioned that a widening trade deficit, elevated gold imports, or renewed spikes in crude prices and capital outflows could quickly revive depreciation pressures. 

According to exchange data, foreign institutional investors (FIIs) offloaded equities worth ₹8,009.56 crore on a net basis on Tuesday.