Rupee Bounces Strong As Sensex and Nifty Surge; Forex Sees Pressure from Dollar Demand
The Indian Rupee appreciated 14 paise on Friday, settling at 95.21 provisional against the US dollar. This move came as the dollar index retreated from recent high levels and paralleled a buoyant performance in domestic equity markets.Forex traders noted that despite a weakening global dollar index and subdued movements in crude oil prices, the rupee faced consistent selling pressure stemming from robust dollar demand across corporate hedgers and importers. During the interbank market session, the currency traded within a range of 95.16-95.35.
Rupee Movement and Forex Market Dynamics
The rupee closed at 95.21 (provisional), marking a gain of 14 paise from its previous close. This comes after a negative performance on Thursday, when the currency settled at 95.35, showing a loss of 19 paise against the US dollar.Experts point to the active interventions by the Reserve Bank of India (RBI) in foreign exchange markets. The central bank is reportedly purchasing dollars to bolster its reserves, which have fallen to approximately USD 672.6 billion from a high of USD 728.49 billion recorded back in February.
Meanwhile, the dollar index, which tracks the strength of the greenback against six other currencies, registered at 100.75. This level is lower compared to its recent peak of 101.6. Brent crude oil futures were reported slightly higher, trading up by 0.22 per cent at USD 71.96 per barrel.
Domestic Equities Rally Amid Global Concerns
The domestic equity markets showed resilience, with the Sensex climbing significantly. The index settled at 77,763.91, recording a gain of 261.79 points. Nifty mirrored this strength, rising by 95.15 points to close at 24,270.85.These gains occurred despite underlying global risks and continued scrutiny over capital flows. For instance, foreign institutional investors (FIIs) reported a net selling of equities worth Rs 311.82 crore on Thursday alone.
FPI Withdrawals Surge as Global Risk Aversion Continues
The trend of capital outflow by foreign entities remains evident across the short and medium term horizons. In June alone, foreign investors withdrew Rs 49,340 crore (USD 5.16 billion) from Indian equities.This ongoing withdrawal has been attributed to a confluence of factors including early-month global risk aversion, persistent preference for developed markets by global funds, soaring US bond yields, and stretched valuations within the domestic stock market. Total withdrawals by Foreign Portfolio Investors (FPIs) have reached Rs 2.7 lakh crore so far in 2026 through data from Central Depository Services (India) Ltd. This figure significantly surpasses the Rs 1.66 lakh crore pulled out during the entire calendar year of 2025.
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