The Indian rupee hovered near 95.5, edging lower after recent gains driven by the Reserve Bank of India’s measures to attract capital inflows.
While the central bank’s actions initially boosted sentiment and supported the currency, persistent headwinds have limited further appreciation.
Market participants remained cautious as foreign investors continued reducing their holdings in Indian equities, while steady dollar demand from importers and corporate hedging activity kept pressure on the rupee.
External factors also weighed on sentiment, with escalating geopolitical tensions in the Middle East pushing crude oil prices higher and raising concerns over India’s import costs.
Meanwhile, market attention is turning to upcoming US inflation data.
Stronger-than-expected price pressures could reinforce expectations that the Federal Reserve will keep interest rates elevated for longer, bolstering the dollar and adding further pressure on emerging-market currencies, including the rupee.
