The Indian rupee weakened by 6 paise to settle at 90.29 against the U.S. dollar in the latest trading session, pressured by risk-averse sentiment in global financial markets and persistent geopolitical tensions. Forex traders said the domestic currency is likely to remain under pressure in the near term, even as expectations of a rate cut rise amid signs of softening inflation.

Market participants pointed out that uncertainty in global markets has driven investors toward safe-haven assets such as the U.S. dollar, strengthening the greenback against most emerging market currencies. Ongoing geopolitical developments, coupled with concerns over global economic growth, have further dampened risk appetite, weighing on currencies like the rupee.

At the interbank foreign exchange market, the rupee opened slightly weaker and remained under pressure throughout the session. It touched a low of 90.32 before closing at 90.29, compared to the previous close of 90.23 against the dollar. Traders noted that dollar demand from importers, particularly oil companies, also contributed to the rupee’s decline.

Despite the weakness, analysts highlighted some supportive factors for the domestic currency. India’s inflation data has shown signs of easing, increasing the likelihood of a rate cut by the Reserve Bank of India (RBI) in the coming months. Softer inflation could provide room for monetary easing, potentially supporting economic growth, though it may also limit the rupee’s upside if interest rate differentials narrow.

Forex experts said that while rate cut expectations are growing, global factors continue to dominate currency movements. The U.S. Federal Reserve’s policy outlook, bond yield movements, and geopolitical risks remain key drivers for the dollar-rupee pair. Any sustained strength in U.S. yields could further support the dollar, keeping pressure on the rupee.

Meanwhile, domestic equity markets showed mixed performance, offering limited support to the local currency. Foreign institutional investor (FII) flows remained volatile, with investors adopting a cautious stance amid global uncertainty. Persistent FII outflows, if they continue, could add to downward pressure on the rupee.

Looking ahead, traders expect the rupee to trade with a negative bias in the near term, with volatility driven by global cues. Key factors to watch include developments in geopolitical hotspots, upcoming U.S. economic data, and signals from central banks regarding future interest rate paths. Any sharp movement in crude oil prices could also impact the rupee, given India’s heavy dependence on oil imports.

In the short run, analysts believe the rupee may continue to hover around the 90.00–90.50 range against the U.S. dollar. While easing inflation and stable macroeconomic fundamentals provide some support, heightened global risk aversion is likely to keep the currency under pressure in the days ahead.Rupee falls 6 paise to close at 90.29 against U.S. dollar