Rupee Slips to Two-Month Low on Foreign Outflows and Oil Demand

The Indian rupee weakened further on Tuesday, closing at 96.42 per US dollar, down 13 paise from its previous close of 96.29. This decline was driven by sustained outflows from foreign investors and heightened dollar demand from oil companies. While the Reserve Bank of India's likely intervention helped limit the losses, the rupee still marked its lowest closing level in over two months.

The rupee opened at 96.32 and extended its losses to 96.45 amid cautious market sentiment. Data from NSDL revealed that foreign portfolio investors withdrew approximately $2.4 billion in October alone, seeking safer assets due to ongoing geopolitical tensions between the US and Iran. So far this year, a net $24.4 billion has flowed out of Indian markets.

Traders are now closely watching the Reserve Bank of India's upcoming monetary policy commentary. While a 25 basis points rate hike is largely anticipated, the market remains cautious about the rupee's performance in the near term.