The sharp decline in the Indian rupee in recent sessions has raised fresh concerns in the currency market. Despite ongoing trade discussions with the United States and expectations of a free trade agreement with the European Union, the rupee slipped to its all-time low against the US dollar on Thursday. However, it staged a quick recovery later in the day and closed with a gain of 9 paise.

Rupee Recovers in Early Trade on Friday

Supported by softer global crude oil prices, the Indian rupee showed signs of recovery in early trade on Friday. The domestic currency strengthened by 9 paise against the US dollar to trade at the 91.90 level, moving away from its record low.

Gains Remain Limited

According to foreign exchange traders, the rupee’s recovery remained limited due to a strong US dollar and continued selling by foreign institutional investors (FIIs). In the interbank foreign exchange market, the rupee opened at 91.89, strengthened to 91.87 in early trade, and later hovered around 91.90 against the dollar.

This marked a 9-paise rise compared to its previous close. On Thursday, the rupee had settled at 91.99, its weakest level on record.

What Market Experts Say

Akshat Garg, Chief of Research and Products at Choice Wealth, said that persistent strength in the US dollar, rising US bond yields, and sustained FII outflows have kept pressure on emerging market currencies, including the Indian rupee.

He added that increased dollar demand from importers toward the end of the month and precautionary hedging activities have further weighed on the rupee. While the Reserve Bank of India has sufficient resources to manage excessive volatility, aggressive intervention is unlikely unless market conditions turn disorderly.

Impact of Global and Market Cues

Earlier, on January 23, the rupee had also slipped to the 92 level against the US dollar, touching a record low. Meanwhile, the dollar index, which measures the greenback’s strength against six major currencies, rose 0.36 percent to 96.48.

In the global oil market, Brent crude futures declined by about 1.50 percent to trade at $69.62 per barrel, providing some support to the rupee.

Although the rupee has shown a modest recovery from its record low, persistent global headwinds, a strong dollar, and foreign fund outflows may continue to influence currency movements in the near term.