MUMBAI: The Indian rupee weakened slightly on Thursday, pressured by corporate dollar demand and likely portfolio outflows even as broad-based dollar weakness boosted its regional peers.
The rupee closed at 85.60 against the U.S. dollar, down 0.1% from its close at 85.51 in the previous session.
Asian currencies rose with the Taiwanese dollar leading gains with a 1.6% rise while the offshore Chinese yuan rose 0.2%. The dollar index, meanwhile, fell 0.4% to 98, its lowest level in over a month.
The rupee was unable to benefit from a broadly weaker dollar in the face of dollar bids from local companies and foreign banks, likely on behalf of custodial clients, traders said.
The local currency has been a laggard among its regional peers over 2025 as well, with analysts citing India’s external investment deficit among the hurdles that have held it back.
On the day, India’s benchmark equity indexes, the BSE Sensex and Nifty 50, fell about 1% each on the day, as ambiguity over the U.S-China trade deal and rising Middle East tensions dampened risk appetite.
Indian rupee set for calm open amid yuan watch, two-sided flows
Crude oil prices pulled back on the day after rising over 4% in the previous session in light of Iran’s threat to strike U.S. bases in the Middle East region if nuclear talks fail.
“Higher oil prices are a dollar positive by way of the U.S. comparative advantage in energy independence,” ING Bank said in a note.
“Any further developments here could see the dollar favoured for its liquidity – although the yen and Swiss franc would be in demand too,” ING said.
Dollar-rupee forward premiums, meanwhile, ticked up on the back of a rise in bets on a rate cut by the U.S. Federal Reserve in September after data released on Wednesday showed that U.S. consumer prices rose less-than-expected in May.
