Rupee Ends a Tad Lower, Hurt by Corporate Dollar Bids, Outflows

Rupee Eases Marginally Amid Corporate Dollar Demand, Capital Outflows

Mumbai, June 12, 2025 – The Indian rupee closed marginally lower on Wednesday, weighed down by persistent corporate dollar demand and capital outflows from domestic equities. The currency ended at ₹83.43 per dollar, down slightly from the previous close of ₹83.39, marking a subdued session amid mixed global cues.

Although the dollar index remained relatively stable and crude oil prices offered limited support, a combination of external fund repatriation and month-end corporate outflows kept pressure on the rupee.

Corporate Demand Caps Rupee Upside

Currency traders noted that mid-month corporate demand for the U.S. dollar—often arising from importers and multinational firms repatriating profits—played a key role in limiting the rupee's gains despite supportive factors such as subdued U.S. inflation data and a mild dip in Treasury yields.

“We saw steady corporate demand for dollars today, particularly from energy and IT companies,” said Abhishek Goenka, founder of IFA Global. “That added to the selling pressure on the rupee, especially during afternoon trading hours.”

Exporters, however, remained on the sidelines, waiting for better levels to offload their dollars, which meant demand outpaced supply through the session.

Foreign Outflows Weigh on Sentiment

Another major headwind was continued selling by foreign institutional investors (FIIs) in the Indian equity markets. On Tuesday, FIIs net sold over ₹1,300 crore worth of Indian shares, and the trend appeared to persist through Wednesday, according to provisional data from exchanges.

“The recent correction in Indian equity indices is prompting some foreign investors to book profits and move funds offshore,” noted Anindya Banerjee, VP, Currency Derivatives at Kotak Securities. “Such outflows inevitably lead to rupee depreciation as dollars are bought to repatriate funds.”

The benchmark BSE Sensex ended down 377 points, adding to the pressure on the rupee.

Dollar Index and Fed Cues Keep Market Cautious

Globally, the dollar index hovered around 104.80, maintaining its narrow range after recent U.S. macroeconomic data showed a slight cooling in inflation. The U.S. Consumer Price Index (CPI) rose 3.3% in May, slightly below expectations, leading to speculation that the U.S. Federal Reserve may adopt a more dovish tone in its upcoming policy meeting.

While the softer inflation print initially triggered a mild weakening of the dollar, the impact was limited as investors awaited clearer guidance from the Fed's post-meeting commentary.

“The dollar was largely stable today, but traders are keeping their powder dry ahead of the FOMC,” said Radhika Rao, economist at DBS Bank. “That’s keeping emerging market currencies, including the rupee, in a narrow band.”

Crude Oil Prices Provide Limited Relief

On the commodities front, Brent crude prices hovered around $81.60 per barrel, easing marginally amid mixed demand signals from China and OPEC+. Although lower crude prices typically aid the rupee due to India’s high oil import dependence, the benefit was neutralized by higher dollar demand from oil marketing companies.

RBI Presence Likely in Background

Traders speculated that the Reserve Bank of India (RBI) may have intervened subtly to prevent undue volatility, though no large-scale intervention was apparent.

“The RBI is probably watching the 83.50 level very closely,” said Rahul Bajoria, Head of Emerging Markets Asia Economics at Barclays. “They have been active in the past at similar levels to anchor expectations and avoid excessive depreciation.”

The central bank has consistently maintained that it does not target a specific level but seeks to curb volatility.

Outlook: Limited Near-Term Gains for Rupee

Looking ahead, analysts expect the rupee to remain range-bound with a mild depreciation bias, unless there is a significant shift in either Fed policy stance or capital flow trends.

“The rupee could trade between ₹83.30 to ₹83.60 in the coming sessions,” forecast Sugandha Sachdeva, Executive VP at Religare Broking. “A decisive break below 83.30 is unlikely unless there is a sharp reversal in FII flows or dollar weakness post-FOMC.”

Market participants will be closely tracking the Fed decision later tonight, along with updates on India's trade balance data due next week.

Key Takeaways:

• Rupee ends at ₹83.43 vs previous close of ₹83.39.

• Corporate dollar demand, especially from oil and tech firms, put pressure.

• FII outflows from equities also weighed on sentiment.

• Crude oil prices eased but failed to boost rupee materially.

• RBI likely monitoring market but not visibly active today.

• Near-term range seen between ₹83.30–₹83.60, pending Fed guidance.