MUMBAI, June 4 (Reuters) - The Indian rupee is likely to open weaker on Wednesday, weighed down by equity outflows and corporate dollar demand for hedging and payment needs.

The 1-month non-deliverable forward indicated an open in the 85.66-85.68 range, versus 85.59 in the previous session.

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The Indian rupee has been mostly on the back foot in recent sessions, with bankers pointing to sustained dollar demand for immediate payments, muted equity flows, and hedging activity during dollar dips.

Foreign investors pulled over $300 million from Indian equities on Tuesday, according to preliminary data, adding to the more than $1 billion in outflows over the prior three sessions.

"The price action hasn't been too encouraging lately (for the rupee)," a currency trader at a bank said. "Two things stand out — the rupee appears to be charting its own course, rather than following the broader Asia trend, and the underlying dollar demand remains heavy."

Near-term support for the rupee is seen in the 85.60–85.70 range, an area that has attracted buyers in recent days.

"The next key level to watch is 86 — a break above could prompt another wave of dollar buying," a treasury official at a bank said.

ASIA FX MIXED

Asian currencies were mixed on Wednesday, mirroring the previous session's tone. The dollar index was slightly lower after Tuesday's advance, with markets focused on the upcoming U.S. jobs report for May and developments in President Donald Trump’s tariff negotiations with major trading partners, including China.

The question marks around whether Trump and China President Xi Jinping will pick up the phone and have a conversation are an important driver of markets, MUFG Bank said in a note.

That said, the market's sensitivity to tariff headlines appears to have waned. Intraday volatility in Asian currencies has come off.

KEY INDICATORS:

** One-month non-deliverable rupee forward at 85.76; onshore one-month forward premium at 11.75 paisa

** Dollar index up at 99.22

** Brent crude futures down 0.3% at $65.5 per barrel

** Ten-year U.S. note yield at 4.45%

** As per NSDL data, foreign investors sold a net $246.4mln worth of Indian shares on June 2

** NSDL data shows foreign investors bought a net $53.2mln worth of Indian bonds on June 2

https://www.reuters.com/world/india/rupee-drop-potential-equity-outflows-test-key-support-2025-06-04/