Indian Rupee Weakens for Third Session Amid Importer Dollar Demand and Foreign Outflows

The Indian rupee weakened for the third consecutive trading session on Monday, slipping to end at 95.1850 against the US dollar, marking a decline of 0.3 per cent for the day. The local currency has fallen by about 0.8 per cent over the past three sessions.

Market participants noted that the currency opened little changed but faced downward pressure as importers stepped up dollar purchases. The absence of support from Reserve Bank of India dollar sales and inflows linked to the Jio Platforms IPO—which had provided backing in recent sessions—left the rupee more exposed to importer demand.

Macroeconomic factors, including elevated oil prices and foreign capital outflows, weighed heavily on the currency. Benchmark Brent crude traded at around $115 a barrel during Asian hours on Monday. The contract has risen for a third straight week, gaining around 13 per cent over that period amid mounting concerns over supply disruptions following attacks by Houthis on Saudi Arabia.

Higher crude oil prices threaten to widen India's import bill, stoke inflationary pressures, and impact broader market sentiment. Such conditions could prompt companies to increase currency hedges and make foreign investors more cautious regarding Indian assets.

Vaibhav Shah, head of products, business strategy and international business at Mirae Asset Mutual Fund, stated that continued geopolitical conflict would exert pressure on oil prices, currency, and broader earnings recovery. He also noted that global capital has shifted toward markets with direct exposure to the chip and artificial intelligence boom.

Depository data indicates that foreign investors have net sold Indian equities worth nearly $5 billion so far in October, following net sales of $3.75 billion in September.

Attention has now shifted to the US Federal Reserve's upcoming monetary policy decision on Wednesday, where a rate pause is widely expected, with market participants closely monitoring the future interest rate trajectory.

"The ongoing depreciation of the rupee highlights the direct impact of global macroeconomic headwinds, particularly volatile crude oil prices and sustained foreign equity outflows, on domestic currency stability. For businesses, especially startups and enterprises dependent on imports or foreign capital, this environment necessitates disciplined currency hedging and careful cash flow management. As global capital flows shift toward technology-driven markets, founders must remain adaptable to tightening liquidity conditions and closely monitor upcoming central bank policy decisions." — Dr. Shishir Gupta, Founder & CEO, StartupLanes