Rupee weakens to 95.91 as dollar strength, fund outflows weigh

The rupee opened at 95.89 against the US dollar at the interbank foreign exchange market before sliding further to 95.91 during early trade on Wednesday. The decline of 3 paise from Tuesday's close of 95.88 reflects sustained selling pressure on the local currency, forex traders said.

The depreciation is being driven by broad US dollar strength and a pullback in foreign investment inflows into Indian markets. The dollar index, which measures the greenback's performance against a basket of six major currencies, was trading at 99.38, up 0.04 per cent, bolstered by market expectations of further interest rate increases by the US Federal Reserve.

The rupee has come under significant pressure in recent sessions, having weakened by 113 paise or more than 1 per cent over the five trading days preceding Tuesday's close. The currency had traded at 94.43 on September 4.

Support for the rupee came from strength in domestic equity markets on Wednesday, cushioning the impact of foreign capital outflows. However, elevated crude oil prices, driven by escalating geopolitical tensions in West Asia, continued to pose risks to the currency outlook, analysts noted.