Rupee‍‌‍‍‌‍‌‍‍‌‍‌‍‍‌‍‌‍‍‌‍‌‍‍‌‍‍‌‍‌‍‍‌ Drops 3 Paise to 88.66 vs. US Dollar Amid FII Outflows and Increasing Greenback

Mumbai, November 7, 2025:  The Indian rupee slipped by 3 paise to 88.66 against the US dollar in early Friday trading. The depreciation was primarily driven by the strengthening of the dollar, coupled with continued foreign fund outflows from the domestic equity market.

Opening and Intra-day Movement

The Indian rupee, after opening strong at 88.61 in the interbank foreign exchange market, weakened to 88.66 in early Friday deals, down 3 paise from Thursday’s close of 88.63. The domestic currency had rebounded by 7 paise against the dollar in the previous session. However, persistent demand for US dollars from importers and foreign investors kept the rupee under pressure, leaving it slightly weaker in the morning session.

Global Market Factors

The US dollar gained strength, with the dollar index rising 0.08% to 99.66, reflecting increased investor preference for safe-haven assets. Experts attributed this trend to robust US economic data and expectations that the Federal Reserve is unlikely to make significant interest rate cuts in the near term.

Meanwhile, Brent crude futures, after losing ground in the previous session, recovered slightly, rising 0.39% to around USD 63.62 per barrel. Concerns over oversupply and falling demand in the US continue to influence the market. Higher oil prices are expected to raise India’s import bills, increasing the demand for dollars and putting additional pressure on the rupee.

Domestic Market Impact

Indian equity benchmarks started the day on a weak note, pressured by global market weakness and continued selling by foreign investors. The BSE Sensex dropped 610.92 points, or 0.73%, to 82,700.09, while the NSE Nifty declined 169.50 points, or 0.66%, to 25,340.20 in early trade.

Exchange data indicates that Foreign Institutional Investors (FIIs) were the predominant sellers on Thursday, offloading shares worth ₹3,263.21 crore. FIIs have maintained a persistent selling streak in the domestic markets, adding to the downward pressure on stock indices.

Economic Indicators

On the macroeconomic front, a private survey indicated a moderation in the Indian services sector. The HSBC India Services PMI fell to 58.9 in October from 60.9 in September, marking the slowest growth in the sector over the past five months. Experts attributed the slowdown to intense competition and the adverse impact of heavy rainfall, which negatively affected production growth during the period.

Outlook

The U.S. dollar continues to hold strength, while FII outflows remain persistent, keeping domestic equities under pressure. In this environment, the rupee is likely to trade within a narrow range with a bearish bias in the near term. Market participants expect the Reserve Bank of India to intervene if volatility intensifies. Overall, sentiment remains cautious, with global risk appetite subdued.

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