The Indian rupee closed at 95.45 against the US dollar as global uncertainties, foreign selling, and domestic inflation pressures continue to weigh on the currency, with analysts warning of continued downside risks despite possible RBI interventions.
The rupee weakened on Thursday, closing at 95.45 against the US dollar, as traders weighed persistent foreign selling, soft domestic equities and a firmer greenback in overseas markets. PTI reported that the currency moved in a narrow band through the session before ending 12 paise lower from the previous close.
Market sentiment was also clouded by geopolitical uncertainty and the slow progress of talks between the US and Iran, according to forex dealers quoted in the report. A stronger dollar has added to the pressure, while the Reserve Bank of India is still viewed as a possible stabilising force if volatility worsens. Analysts at Mirae Asset ShareKhan said the rupee may remain biased to the downside in the near term, though softer crude prices and any central bank intervention could help limit losses.
The currency’s decline comes against a mixed domestic backdrop. India’s retail inflation rose to 4.45% in July, driven by higher prices for staples such as onion and ginger, staying above the Reserve Bank’s median target for a second straight month. At the same time, foreign institutional investors sold equities worth Rs 1,002.50 crore on Wednesday, underscoring the continued pressure from capital outflows.
Broader research on the rupee’s recent weakness suggests the slide is being driven less by any single domestic shock and more by a combination of global risk aversion, a strong dollar and India’s reliance on imported goods and inputs. Reports from Invesco Mutual Fund and Union Bank of India have argued that while a weaker currency can aid exporters, those benefits are often offset by higher import costs and subdued global demand. They also note that RBI interventions can smooth volatility, but persistent foreign portfolio outflows and trade-related uncertainty continue to shape sentiment.
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