Indian Rupee Weakens Amid Outflows and Regional Risks
The Indian rupee is expected to open lower near 95.74 per dollar as foreign investors withdraw capital from local equities amid escalating Middle East tensions. Market participants are monitoring reports that India may remove capital gains tax on foreign investments in government bonds to support the currency.
The India rupee is expected to open lower near 95.74 on Thursday morning as equity outflows and regional weakness weigh on the currency. Foreign investors pulled $600 million from Indian stocks on Wednesday, following $3 billion in exits over the prior three days. The currency has come under renewed pressure after a brief recovery toward the 94.70 level.
### Geopolitical Risks and Capital Flight Renewed fighting between the United States and Iran has reignited the uptrend in the USD/INR pair. A private sector bank trader said the flare-up is the most serious since the previous ceasefire, impacting hopes for a diplomatic detente. India remains vulnerable to these tensions as a net energy importer.
