Rupee Opens Higher at ₹86.01 as Crude Prices Ease; Traders Eye Fed Cues

The Indian rupee opened marginally 5 paise higher on Tuesday, 17th June, at ₹86.01 against the US dollar, recovering from its previous close of ₹86.06. The appreciation comes after a brief streak of declines, with the rupee breaching the ₹86 mark last week amid rising crude oil prices and global risk aversion.

Cooling Oil Prices Provide Temporary Relief

The slight strengthening of the rupee can be attributed to the softening of international crude oil prices, which have come off recent highs. Brent crude dipped towards the $82 per barrel mark after spiking in response to geopolitical tensions in the Middle East.

Brent Crude price was up 0.60% to $73.67 per barrel, while WTI Crude prices were higher by 0.45% at $72.15. Lower oil prices ease pressure on India’s import bill and trade balance, providing some cushion to the domestic currency.

India imports over 85% of its crude oil requirements, making the rupee sensitive to fluctuations in global oil markets. With the recent pullback in crude, the trade deficit outlook has improved modestly, contributing to Monday’s rupee gains.

Dollar Demand Balanced by Exporter Supply

While broad dollar strength continues globally amid cautious sentiment ahead of the US Federal Reserve’s commentary, exporter-led dollar sales in the domestic market have helped arrest a steeper rupee depreciation.

According to currency dealers, corporate and exporter flows provided support near the ₹86.10 level, helping the rupee stabilise during early trade.

Moreover, foreign portfolio inflows into Indian equities and debt, which have remained relatively resilient in June, continue to act as a buffer, despite ongoing geopolitical uncertainty and fluctuating US yields.

Market Awaits Fed Signals

All eyes are now on the upcoming US macroeconomic data and Federal Reserve comments. Any indication of interest rate adjustments or a change in the Fed’s monetary stance will influence capital flows and affect emerging market currencies, including the rupee.

Traders remain cautious ahead of the mid-week Fed event, as persistent inflation in the US could lead to prolonged higher interest rates, making dollar assets more attractive and potentially weakening the rupee further.

RBI’s Watchful Eye

The Reserve Bank of India is expected to remain vigilant in managing currency volatility. While the central bank has not intervened aggressively in recent sessions, it is likely to step in if the rupee witnesses sharp swings that could destabilise financial markets.

Analysts believe the RBI is comfortable with a gradual and orderly depreciation but would act to prevent disorderly movements, especially as global uncertainties linger.

Outlook Remains Range-Bound

The rupee is likely to trade within a tight range in the near term, with key support seen at ₹86.30 and resistance around ₹85.80. Currency markets are expected to remain sensitive to oil price trends, Fed policy cues, and geopolitical developments.

In summary, while Tuesday's opening indicates a mild recovery in the rupee backed by easing crude prices and stable flows, the overall sentiment remains cautious. Traders are bracing for higher volatility as the global monetary policy narrative unfolds in the days ahead.

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