Rupee sinks to two-month low amid FPI selling and rising US yields

Kolkata: The Indian rupee fell 0.5% Thursday to 96.3150 against the dollar, making it a two-month low and mirroring the fall in major Asian currencies, while overseas portfolio investors continued to offload their investments in Indians equities and debt in a risk-off strategy following the surge in US bond yields.

The rupee closed the previous session at 95.83 a dollar.

It breached the psychological 96-level twice in three days. Thursday's trade marked the sharpest single-day fall in more than two months on high dollar demand, even as the Reserve Bank of India intervened to cap the losses.


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"The Indian rupee weakened in tandem with most Asian currencies as the US dollar extended its rise, supported by higher US bond yields and a rebound in crude oil prices," Dilip Parmar, an analyst with HDFC Securities said in a note.

"Risk‑averse sentiment, persistent foreign fund outflows, dollar short covering by the market participants and the central bank’s sizable forward short‑dollar position continued to weigh on the currency," he said.

Traders said that custodian banks kept buying dollars signalling unabated foreign portfolio outflows. There was also high dollar demand from importers.

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NSDL data showed that $991 million or Rs 9508 crore went out of the local markets Thursday.

Foreign institutional investors withdrew investments worth $23 billion or Rs 2.15 lakh crore in 2026.

Meanwhile, US bond yields rose to 5.3%, a two-decade high, also pushing the dollar index to more than three-month high.

The rupee opened the day weaker at 95.96 a dollar but strengthened to 95.89 before coming under intense pressure mirroring the 570 points fall in BSE Sensex.