Rupee Extends Gains Despite Ongoing FPI Outflows; Opens at 88.62 per Dollar

The Indian Rupee advanced for a second consecutive session on Thursday, opening seven paise higher at 88.62 against the U.S. dollar, according to Bloomberg data. The domestic currency found temporary support despite persistent foreign portfolio investor (FPI) outflows and lingering concerns over trade and visa-related tensions with the United States.

So far this year, the INR has depreciated by 3.57%, touching a record low of 88.79 per dollar earlier this week. On Wednesday, global funds continued their selling spree for a third straight day, offloading ₹2,425.75 crore from Indian equities.

Market Dynamics and RBI Stance

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Traders noted that the dollar-rupee pair hovered near recent highs after the Reserve Bank of India (RBI) kept its monetary stance unchanged. According to Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, further weakness in the Rupee cannot be ruled out as FPIs keep selling equities and buying dollars.

He added that the RBI seems to be allowing a controlled depreciation of the currency to aid exporters. With the RBI’s policy meeting scheduled for October 1, markets are also factoring in the possibility of a rate cut. Bhansali suggested that exporters consider selling near 88.80 while importers may look to buy on dips around 88.60.

U.S. policy and visa concerns

Trade talks between India and the United States have so far failed to deliver any breakthrough, with the Commerce Ministry team expected to return this weekend. Adding to investor unease, the Trump administration announced plans to reform the H-1B visa process, proposing that allocation be based on skills and wages rather than the current lottery system. Earlier this week, President Donald Trump signed an executive order sharply increasing H-1B application fees to $100,000, up from the previous $2,000–5,000 range.

Global market cues

The dollar index rose to a three-week high after U.S. Federal Reserve Chair Jerome Powell pointed to “two-sided risks” for the American economy. However, the index eased slightly, trading down around 0.01%, against a basket of six major currencies.

Meanwhile, oil markets showed signs of pressure as crude prices fell on concerns about supply conditions. Data indicated a decline in U.S. crude inventories, but prices remained soft. Brent crude prices slipped, while WTI crude dropped as well.

Outlook

Key global cues to track include the Bank of Japan’s monetary policy minutes, the U.S. final second-quarter GDP growth rate, core personal consumption expenditure prices, and weekly jobless claims for the period ended September 20. These indicators, along with FPI flows and RBI’s policy outlook, will likely guide the Rupee’s near-term trajectory.

Conclusion

Despite opening stronger, the Rupee remains vulnerable to external pressures, including persistent FPI selling, U.S. policy shifts, and global market volatility. With the RBI’s October meeting ahead, investors and businesses alike are watching closely for signals that could determine the currency’s next move.