The Indian rupee extended its losing streak to a fourth straight session on Wednesday, settling 45 paise lower at 86.71 against the US dollar. The slide came despite falling crude oil prices and a weaker dollar index, as global trade tensions and foreign fund outflows rattled investor sentiment.
Volatility Reigns as Rupee Weakens
At the interbank forex market, the rupee opened at 86.52 and swung between 86.47 and 86.71 during the session. Wednesday’s decline follows Tuesday’s 50 paise drop — the steepest single-day fall since January 13 — bringing the total loss in four sessions to 104 paise.
Forex traders attributed the pressure on the rupee to persistent outflows from foreign institutional investors (FIIs), lackluster domestic equities, and worsening global trade dynamics. Despite supportive factors like the drop in global crude oil — with Brent crude falling 3.82% to $60.42 a barrel — the rupee failed to recover.
Trade War Escalates, RBI Cuts Rates
Analysts said market sentiment was weighed down by renewed US-China trade tensions, following President Trump’s move to impose an additional 50% tariff on Chinese goods. A new set of US tariffs, including a 104% duty on key Chinese imports, kicked in Wednesday, further hitting global risk appetite.
Meanwhile, the Reserve Bank of India cut the repo rate by 25 basis points to 6%, in a bid to stimulate economic growth. It also revised its FY26 GDP growth forecast down to 6.5%, citing global uncertainties. RBI Governor Sanjay Malhotra clarified that the central bank does not aim for a fixed rupee level, intervening only during disruptive volatility.
Markets Tumble, FIIs Exit
The equity market reflected the broader unease. The BSE Sensex fell 379.93 points to close at 73,847.15, while the NSE Nifty dropped 136.70 points to 22,399.15. On Monday, both indices had already witnessed heavy sell-offs, plunging over 5% intraday before ending nearly 3% down.
Exchange data showed that FIIs sold Indian equities worth ₹4,994.24 crore on a net basis Tuesday, adding to the downward pressure on both the rupee and the markets.
With inflation data from the US due soon, analysts expect USD-INR to trade in a tight range between 86.30 and 86.90 in the near term.