The rupee edged up against the US dollar in early trade on Thursday after crude oil prices witnessed a slight decline amid positive signals from West Asia. The rupee opened 1 paise higher at 95.70 against the US dollar.
However, the local currency remains under pressure due to ongoing foreign fund outflows, weakness in regional currencies, and persistent geopolitical tensions in the Middle East.
Foreign and domestic investor sentiment has been weighed down by the possibility of a breakthrough in US-Iran negotiations, even as concerns remain that the conflict could spiral out of control.
A prolonged escalation causing disruptions in the Strait of Hormuz would leave the Indian economy in serious trouble, as India is one of the largest importers of crude oil globally.
Foreign investors have intensified selling in the Indian stock market, with reports on Wednesday suggesting they pulled out nearly $600 million.
The market has seen nearly $3 billion worth of outflows over the previous three trading sessions.
According to the latest reports, persistent pressure from high-yielding dollar bonds and a strong US dollar have increased pressure on the rupee.
However, market participants expect potential policy measures to support the rupee, which could help cushion the currency against further depreciation.
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