Rupee Slides 16 Paise to 95.24 Against US Dollar Amid Foreign Fund Outflows

India's rupee weakened by 16 paise to close at 95.24 against the US dollar on Thursday, reversing part of the previous session's gains as a stronger US dollar and continued foreign fund outflows weighed on investor sentiment.

The domestic currency opened at 95.13 against the greenback in the interbank foreign exchange market and moved within a narrow range of 95.12 to 95.24 before settling at 95.24, compared with Wednesday's close of 95.08, when it had gained 20 paise.

According to forex market experts, the rupee came under pressure as the US Dollar Index edged higher and US Treasury yields firmed up, making the American currency more attractive to global investors. Persistent foreign institutional investor (FII) selling in Indian equities also added to the pressure on the local currency.

Despite the weakness, a sharper decline in the rupee was prevented by relatively lower crude oil prices and growing optimism over a possible diplomatic breakthrough between the United States and Iran, which could ease concerns over global oil supplies.

Market analysts noted that Brent crude hovering around USD 80 per barrel is significantly more favourable for India than the triple-digit oil prices witnessed in July. Lower oil prices help contain the country's import bill, inflationary pressures and current account deficit, offering some support to the rupee.

Experts believe the currency could witness a mildly positive trend if global risk appetite improves further. However, any renewed strength in the US dollar or rise in Treasury yields may limit gains. Investors will also monitor the latest US weekly unemployment claims data for fresh cues on global markets.

Meanwhile, Indian equity benchmarks ended in positive territory. The Sensex gained 373.76 points to close at 78,954.76, while the Nifty finished 11.35 points higher at 24,636. However, FIIs remained net sellers, offloading Indian equities worth Rs 943.42 crore, reflecting cautious overseas investor sentiment.