MUMBAI, June 19: The Indian rupee opened on a weaker note on Thursday, declining 21 paise to 94.71 against the US dollar in early trading. Currency market participants attributed the decline to a stronger American dollar following the US Federal Reserve’s indication that interest rates could remain elevated for longer than expected.
At the interbank foreign exchange market, the domestic currency began the session at 94.66 and slipped further to 94.71 against the greenback. The fall came a day after the rupee had gained 10 paise to settle at 94.50.
Market experts said the latest weakness in the rupee was largely influenced by developments in the United States, where the Federal Reserve maintained benchmark interest rates but signalled the possibility of at least one additional rate hike later in the year. The comments strengthened the dollar globally and triggered selling pressure across several emerging-market currencies.
The US Dollar Index, which measures the performance of the American currency against six major global peers, climbed to 100.23, marking its highest level in nearly four months. The stronger dollar made risk-sensitive currencies less attractive and pushed investors towards safer assets.
According to treasury market specialists, Asian currencies also witnessed broad-based weakness during the session, adding to pressure on the Indian unit. The stronger demand for dollars across global markets further contributed to the rupee’s decline.
Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, said most major asset classes had weakened against the dollar, keeping demand for the US currency elevated in international markets.
While the currency market remained under pressure, crude oil prices offered some relief. Brent crude futures, the global benchmark for oil prices, traded lower by 1.68 per cent at USD 78.21 per barrel. Lower oil prices are generally positive for India, which imports a significant portion of its energy requirements, as they help reduce import costs and support the country’s external balance.
On the domestic equity front, benchmark stock indices opened in negative territory. The BSE Sensex fell 111.23 points to 77,044.39, while the NSE Nifty declined 26.85 points to 24,058.85 during early trading hours. Weakness in equities often affects investor sentiment and can influence currency movements.
Despite the initial pressure on financial markets, foreign institutional investors (FIIs) remained supportive of Indian equities. Exchange data showed that overseas investors were net buyers on Wednesday, purchasing shares worth Rs 101.59 crore.
Traders noted that broader market sentiment received a boost from reports suggesting progress in diplomatic efforts between the United States and Iran. According to market participants, both countries electronically signed a memorandum of understanding aimed at reducing tensions and establishing a framework for future discussions regarding Iran’s nuclear programme.
The reported agreement has raised hopes of greater geopolitical stability in the Middle East, a region critical to global energy supplies. Negotiators from both sides are expected to continue discussions during a scheduled meeting in Geneva on Friday.
Amit Pabari, Managing Director of CR Forex Advisors, said the understanding between Washington and Tehran had improved overall market confidence. However, investors remained cautious after US President Donald Trump warned that military action could return if Iran failed to meet the agreed conditions.
In another development closely watched by investors, India and the United States moved forward on trade discussions aimed at strengthening economic ties. Prime Minister Narendra Modi and US President Donald Trump held extensive talks on the sidelines of the G7 Summit, directing officials from both countries to accelerate efforts toward a balanced and commercially meaningful trade agreement.
The Ministry of External Affairs stated that the leaders discussed a range of issues and emphasised the importance of expanding economic cooperation. The meeting was seen as a significant step in rebuilding momentum in bilateral relations and enhancing trade opportunities between the two nations.
Further progress may emerge next week when US Trade Representative Jamieson Greer is expected to visit India to continue negotiations on the proposed trade pact. Market participants will closely monitor the outcome of these discussions, as stronger trade ties could support investment flows and improve long-term economic prospects.
For now, however, the rupee remains vulnerable to global monetary policy signals and movements in the US dollar. Traders expect the currency to remain range-bound in the near term, with attention focused on upcoming economic data, Federal Reserve commentary, crude oil prices and developments in international trade negotiations.