Rupee Weakens 8 Paise Against U.S. Dollar Amid Capital Outflows

The Indian rupee weakened by 8 paise to close at 96.43 against the U.S. dollar on Tuesday (October 6, 2026), influenced by sustained foreign capital outflows and ongoing uncertainties surrounding a potential U.S.-Iran deal. This decline was partially offset by a drop in global crude oil prices and a weaker U.S. dollar, according to forex traders.

At the interbank foreign exchange, the rupee opened at 96.29 and fluctuated between 96.29 and 96.45 before settling at its provisional close of 96.43. The previous day, the rupee had depreciated by 10 paise to close at 96.35.

Analyst Anuj Choudhary of Mirae Asset Sharekhan noted that while the rupee traded on a weak note, it recovered from its daily lows due to a sharp fall in crude oil prices and a softening of the U.S. dollar and Treasury yields. He anticipates the rupee to maintain a negative bias amid uncertainties over the U.S.-Iran deal and elevated dollar and Treasury yields. However, softer crude oil prices and reduced odds of a Federal Reserve rate hike in October could provide some support.

The Reserve Bank of India's Monetary Policy Committee began its three-day meeting on Monday and is expected to announce a 25-basis-point rate hike on Wednesday, aligning with other central banks' hawkish stances due to escalating conflict in West Asia and domestic inflation risks. The last repo rate hike was in February 2023, when the rate was raised to 6.50%, followed by a rate-cut cycle in 2025. Currently, the policy repo rate stands at 5.25%.

Meanwhile, the dollar index, which measures the greenback's strength against a basket of six currencies, traded at 102.03, down 0.13%. Brent crude, the global oil benchmark, was trading 1.68% lower at $98.63 per barrel. On the domestic equity market, the Sensex surged 685.34 points to close at 73,067.81, while the Nifty rose 220.35 points to 22,776.10. Foreign Institutional Investors offloaded equities worth ₹4,699.14 crore on a net basis on Monday.