Rupee opens16 paise down at 85.75 against dollar on FPI outflows

Indian rupee

The rupee opened 16 paise down on June 4 on foreign investor selling and record outflows from Indian bonds, as the slide continued for a second day.

The currency opened at 85.75 against the dollar after ending the previous session at 85.59.

The rupee has been under pressure in the last few sessions due to dollar demand and equity outflows, currency experts said.

On June 3, foreign institutional investors (FIIs) sold shares worth Rs 2,854 crore and domestic institutional investors (DIIs) bought Rs 5,908-crore worth of scrips.

DIIs net bought shares worth Rs 15,704 crore and sold shares worth Rs 9,796 crore. FIIs bought shares worth Rs 17,063 crore and sold Rs 19,917 crore in stocks, provisional data shows.

For the year, so far, FIIs have been net sellers of shares worth Rs 1.27 lakh crore and DIIs net buyers at Rs 2.86 lakh crore.

Moneycontrol reported on June 3 that FPI outflows from government securities is highest, so far, in this quarter since the inclusion of Indian bonds in global bond indexes. It is likely due to narrow interest rate difference —around 180 basis points (bps) — between India and US 10-year bonds, said experts,

According to Clearing Corporation of India’s (CCIL) data, foreign investors pulled Rs 25,543.68 crore between April 2 and June 3 from Indian bonds under the Fully Accessible Route (FAR), the first outflow reported in any quarter since the inclusion in global bond indices.

During the day, the rupee is expected to trade in the 85.35-85.85 range against the dollar, said Anil Kumar Bhansali, head of treasury and executive director, Finrex Treasury Advisors LLP.