The Indian rupee fell for the fourth straight session to 96.42 against the US dollar. Rising crude oil prices and geopolitical tensions in West Asia are pressuring the currency, while a global sell-off in AI chipmakers has also dampened investor sentiment.
The Indian rupee faced continued pressure on Thursday, weakening by 17 paise to settle at 96.42 against the US dollar. This marks the fourth consecutive day of decline for the domestic currency, which has now depreciated by a total of 104 paise, or approximately 1.5%, since its July 10 close of 95.38. The depreciation reflects shifting global macro factors that are impacting emerging market currencies.
Impact of Energy Costs and Geopolitics
Forex markets remain sensitive to the rising cost of crude oil, which is a major import for India. Elevated oil prices increase the demand for foreign currency to pay for energy imports, which typically creates downward pressure on the rupee. These challenges are being compounded by ongoing geopolitical tensions in West Asia. Such uncertainty often encourages investors to move capital toward the US dollar, which is viewed as a safer asset during times of global instability, leading to outflows from domestic equity markets.
Global Tech Sell-Off Influences Market Sentiment
Global investor sentiment also took a hit as US markets experienced a correction, particularly in the technology sector. While many companies in the S&P 500 reported earnings that topped analyst expectations, a sharp sell-off in artificial intelligence (AI) and semiconductor stocks weighed heavily on major indices. The tech-heavy Nasdaq Composite dropped 1.5%, as investors moved to book profits following a strong run in chip stocks earlier this year.
Notably, Nvidia, a leader in the AI chip market, saw its stock price decline by 2.4%. Other companies in the semiconductor space faced steeper corrections, with Micron Technology falling 5.6%, SanDisk down 12.6%, and Western Digital slipping 9.2%. This tech-led decline offset positive individual performances, such as a 10.7% surge in Abbott Laboratories following strong earnings and improved annual profit guidance.
What Investors Should Track
For Indian market participants, the primary monitorables remain the trajectory of global crude oil prices and any further escalation in West Asian geopolitical tensions, as these directly influence the rupee's stability and foreign fund flows. Additionally, the broader market will likely watch whether the recent volatility in US AI chipmakers is a short-term profit-booking exercise or the start of a more sustained shift in investor appetite for high-valuation technology shares.