The Indian rupee on Friday opened 4 paise up at 96.31 against the US dollar, but continues to remain under pressure due to weak global risk appetite among investors. The domestic currency is on a four-session losing streak after it reported its first loss on Monday.
The rupee is now trading within 0.5 per cent of its record low of 96.96 per US dollar, touched in May.
The repeated interventions by the Reserve Bank of India (RBI) and capping of dollar purchases in the banking sector have somewhat helped reduce the pressure, but haven't alleviated the pressure entirely. The rupee has weakened even as foreign portfolio flows have improved, particularly in equities.
Foreign institutional investors (FIIs) have purchased nearly $1.5 billion worth of Indian equities so far this month, marking a sharp reversal from the more than $5 billion in net outflows recorded in June.
The reduction of the foreign investment outflows has also caused more uncertainty in the domestic markets, putting further pressure on the domestic currency.
Currency experts said the US dollar has weakened in recent sessions after the softer-than-expected inflation data reduced expectations of an imminent interest rate hike by the US Federal Reserve.
The US Dollar Index slipped to around 100.5, hovering near a one-month low, after June inflation data showed headline consumer inflation easing to 3.5 per cent and core inflation moderating to 2.6 per cent.
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