The Indian rupee declined for the
fourth consecutive session against the dollar on Thursday as
market flows related to arbitrage trades and merchant payments
pinched the currency despite weakness in the dollar and likely
market intervention.
The rupee rose to a peak of 94.9375 in early
trading, helped by dollar sales from state-run banks, likely on
behalf of the Reserve Bank of India, but retreated swiftly as
dollar demand picked up through the session.
The currency ended at 95.3925 against the dollar, down 0.1%
from its previous close. It has fallen about 1% in the last four
sessions.
Traders said that although state-run banks were seen
offering dollars on Wednesday, dollar bids gathered steam in the
latter half of the day and stop-losses on long rupee wagers were
triggered, leading to a fall in the local currency.
Despite foreign inflows and lower crude oil prices, the
rupee has weakened sharply. Markets have increased bullish
dollar bets, showing that investors are still reluctant to
abandon the dollar, said Amit Pabari, managing director at FX
advisory firm CR Forex.
“If the rupee cannot strengthen on good news, any negative
development could easily push the pair (USD/INR) towards the
95.80–96.00 zone.”
Dollar demand related to arbitrage positions between the
non-deliverable and deliverable forward markets also pressured
the rupee on the day, traders said.
PAYROLLS THURSDAY
Most Asian currencies rose on Thursday, with investors
eyeing the moves in U.S. Treasury yields, which have supported
the dollar ahead of the crucial June non-farm payrolls report
due later in the day.
The payrolls report is expected to be a key trigger as a
stronger-than-expected data could push Treasury yields higher,
increasing pressure on the rupee and other Asian currencies.
Interest rate futures have assigned a 67% probability for a
25 basis point rate hike by the Federal Reserve in September. On
the day, the dollar index fell 0.4% to 101.
“To reinforce the US dollar’s current upward momentum
another robust employment increase and/or drop in the
unemployment rate will be needed,” ING said in a note.
Published on July 2, 2026
