Rupee Weakens 11 Paise to 87.29 Against Dollar Amid Foreign Fund Outflows and Tariff Worries

Mumbai, August 4: The INR opened weaker and fell by 11 paise to ₹87.29 against the USD during the early trading minutes on Monday. There are multiple reasons for this, including the ongoing uncertainty over global trade tariffs, increased foreign fund outflows and the recently imposed, higher-than-anticipated trade tariffs on Indian imports by the US President.

Impact on Stocks and Market Strength

Export-sensitive sectors like textiles and pharmaceuticals have borne the brunt of market fallout from newly imposed U.S. tariffs and rupee depreciation. Major pharma and textile stocks declined after the 25% tariff announcement.

Although the impact did not lead to a massive stock market crash, broad indices such as Nifty 50 and Sensex initially dropped by around 1% before recovering partially, amid heightened FII selling and investor caution toward export-oriented equities.

Early Market Movement

At the interbank foreign exchange market, the rupee opened at 87.21 and quickly slipped to an intraday low of 87.29, marking a 11 paise decline from Friday’s close of 87.18. Despite a softer US dollar and easing crude oil prices, the rupee struggled to gain ground due to heightened investor caution and outflows from domestic equities.

Global Cues and Trade Pressure

The dollar index, which measures the greenback’s performance against a basket of six major currencies, dropped by 0.40 percent to 98.74. Brent crude futures also dipped by 0.26 percent to USD 69.49 per barrel, pressured by OPEC+’s decision to hike production in September and fears of a slowdown in the US economy.

Meanwhile, uncertainty deepened after former US President Donald Trump announced sweeping tariffs targeting over 70 countries, including India, amplifying trade-related concerns. Additionally, the resignation of the US Federal Reserve Governor has sparked speculation that Trump may influence Fed policy sooner than expected. US Treasury yields declined as traders increased bets on a possible Fed rate cut in September.

Domestic Equities and FII Activity

In domestic markets, equity indices opened strongly. The BSE Sensex gained 262.08 points or 0.33 percent to reach 80,861.99, while the NSE Nifty rose by 98.50 points or 0.40 percent to 24,663.85.

However, the broader investor sentiment remained cautious, with foreign institutional investors (FIIs) pulling out a net ₹3,366.40 crore from Indian equities on Friday, as per exchange data.

Disclaimer:  At HDFC SKY, we take utmost care and due diligence in curating and presenting news and market-related content. However, inadvertent errors or omissions may occasionally occur.

If you have any concerns, questions, or wish to point out any discrepancies in our content, please feel free to write to us at content@hdfcsec.com.

Please note that the information shared is intended solely for informational purposes and does not make any investment recommendations