INR vs USD: Indian rupee weakens for 5th straight session to 94.29 against US dollar amid hazy peace talks hopes

The Indian currency was trading under pressure on the backdrop of higher oil prices in the market as well as the increased demand for the US dollar among investors looking to park their funds in safer bets away from emerging market assets, fuelling foreign investor outflows.

As of 12:29 pm (IST), the Indian rupee was 0.21% weaker against the US dollar at 94.29 on Friday, compared to 94.10 at the previous currency market close, according to the data collected from Investing.com.

Experts said that despite the ceasefire extension between US and Iran, along with President Donald Trump’s recent announcement of a three-week ceasefire between Lebanon and Israel, the demand for the US greenback was higher in the market with the intensifying standoff.

Latest updates on the West Asia front highlighted that Trump has directed the US Navy warships in the Strait of Hormuz to “shoot and kill” any boats that are seen to be planting mines in the waters of the key trading passage.

Although Trump claims that this move is to clear the waters, markets are wary about any escalation risk for either side amid the ceasefire deal.

High dollar demand

As investors pull out funds from the emerging markets, the demand for the ‘safe haven’ benchmark currency, US dollar, is remerging while it also triggers massive selloffs in asset classes like the domestic equity market.

Data collected from Bloomberg’s US dollar spot index (DYX) showed that the greenback was trading 0.11% higher at 98.876 as of 3:02 am (EDT) on Friday, April 23, compared to the previous currency market close levels.

NSE data as of Thursday’s market close showed that foreign investors sold a total of around ₹3,254.71 crore worth of domestic capital market assets across the exchanges in a single day, pulling out funds from riskier bets in emerging markets.

Forex traders told the news agency PTI that the, unabated withdrawal of foreign funds from domestic stock markets added to investors' tensions which in turn triggered a massive sell-off in equities, further pressuring and dragging down the Indian currency.

On Friday, the benchmark stock indices remained in the red zone with NIFTY50 trading 1.12% lower around 23,900 point levels, while the BSE SENSEX trades 1.3% lower at around 76,675 points as of the mid-market session.