The Indian rupee reversed course and fell for the fourth consecutive session on Monday, pressured by corporate dollar buying that was further complicated by a shortfall in supply.
The rupee appreciated to 90.6450 in early trade following a pullback in the US dollar amid the Greenland dispute but later declined and was on the verge of breaking the 91 level.
Some traders said that the central bank intervened mildly to prevent further losses.
The local unit found early support as the dollar weakened against major peers and Asian currencies, with investors paring dollar exposure amid mounting tensions over Greenland and threats of US tariffs on European nations.
The rupee ended at 90.91 to the dollar, its lowest closing level since December 16. It settled at 90.8650 on Friday.
“Risk-off sentiment is rarely friendly to emerging markets. As investors turn cautious, capital tends to move out of riskier assets. The rupee, already under pressure, may feel added strain and simply put, when the world feels uneasy, emerging market currencies often bear the cost,” said Amit Pabari, managing director at FX advisory firm CR Forex.
The rupee has breached the key zone of 90.30-90.50, with the all-time high of 91.0750 as the next major level to monitor, he added.
The currency’s inability to hold on to its opening advance underscores the current balance in the forex market, where any form of recovery is offset by corporate dollar demand and an overall lack of supply.
Apart from this, outflows from equity markets also continue to hurt sentiment. Foreign investors have withdrawn over $2.5 billion from Indian stocks so far in January.
