Analysts attribute the tightening to a combination of seasonal currency leakage, muted government spending, tax outflows, and most notably, heavy unsterilized foreign exchange intervention by the RBI.
The domestic share market opened on a weak note on Tuesday as both the benchmark indices slipped into negative territory, weighed down by a falling rupee and continued foreign portfolio investor (FPI) outflows.
The merchandise trade deficit moderated to US$ 87.4 billion in Q2, marginally lower than USD 88.5 billion in the corresponding period last year. Exports and imports both grew, but the increase in exports helped contain the deficit.
The Indian rupee vis-a-vis the US dollar is currently trading in a tight range, under pressure from a mix of domestic strength and external challenges, including US tariffs and persistent capital outflows.
The higher US interest rates and a cautious risk appetite among foreign investors are also resulting in continuous pressure on the Indian Rupee. Experts believed that the rupee's weakness is being reinforced by deteriorating trade fundamentals.
Reserve Bank of India (RBI) Governor Sanjay Malhotra said that fiscal consolidation and strong coordination between monetary and fiscal policies have played a key role in helping India manage inflation while supporting economic growth during challenging times marked by tariffs and global unc
The stock markets started the fresh week on a flat note on Monday, as investors remained cautious amid continuous foreign fund outflows, valuation concerns.
The selling pressure returned to Indian markets on Thursday after a brief bounceback in the previous trading session, as persistent foreign investor outflows weighed on sentiments.
Indian stock market opened lower on Thursday, declining for a fifth straight trading session as continued foreign fund outflows and US visa curbs kept market participants on edge.
India's stock markets are being supported largely by consistent mutual fund investments, which are preventing a deeper fall despite heavy outflows, according to a report by Jefferies.
The imposition of a 50 per cent tariff hike by the United States (US) on the imports from India weighed on domestic financial conditions in August, with equity markets taking the biggest blow, according to a report by Crisil.
Indian equity markets started the fresh week with gains in the opening session on Monday, taking positive cues from a rally across other Asian markets.