Rupee Falls Amid Bullish Exits and Strong US Dollar | Forex Market Update

The Indian rupee weakened sharply on Thursday, sliding close to the 86 mark against the U.S. dollar, pressured by unwinding of bullish positions and renewed dollar strength in global markets.

The rupee briefly dropped to 85.9125, before recovering slightly to settle at 85.85, marking a 0.3% decline for the day. The currency is now headed for its sixth loss in seven sessions, having fallen from 84.78 just last Monday.

“The market is backing off earlier long rupee bets,” said a currency trader at a private bank. “The dollar finding its footing and equity outflows aren’t helping either.”

Foreign Outflows and Dollar Gains Add Pressure

Foreign investors pulled out over $300 million from Indian equities on Wednesday, following more than $1 billion in outflows over the previous three sessions, according to preliminary exchange data.

Meanwhile, the U.S. dollar index climbed higher, extending Tuesday’s gains fueled by an unexpected rise in U.S. job openings. Market attention now turns to additional labor data due this week, especially the closely watched non-farm payrolls report for May, which could influence the Federal Reserve’s next interest rate move.

Regional Currencies Also Weaken

Most Asian currencies traded lower, reflecting cautious sentiment as trade tensions resurfaced. The Trump administration has issued a Wednesday deadline for revised trade offers from key partners. Additionally, U.S. President Donald Trump is expected to hold talks with Chinese President Xi Jinping later this week amid renewed accusations of tariff rollback violations by both countries.