Rupee Rebounds by 3 paise After Four-Day Slide, Opens at ₹85.54 Amid Firm Oil Prices

The Indian rupee opened at ₹85.54 against the US dollar on Monday, registering a slight recovery after four consecutive sessions of decline. The modest rebound comes despite continued strength in global crude oil prices and a firm greenback in overseas markets.

The domestic unit had closed at ₹85.57 on Friday. On Monday, it opened marginally stronger by 3 paise, although traders indicated limited upside due to persistent foreign fund outflows and global risk aversion.

Oil Prices and Global Cues Remain Key Drivers

International crude oil prices remained firm, with Brent crude hovering around $64.27 per barrel. While elevated oil prices generally weigh on the rupee due to India's heavy import dependency, the domestic currency showed resilience, supported by an improvement in the domestic macroeconomic backdrop and easing of near-term political uncertainty post-election.

Market participants are closely tracking oil trends, given their potential to widen the current account deficit and exert downward pressure on the rupee. The firm dollar index, which remained near the 105 mark, also kept sentiment cautious.

FPI Outflows and External Pressures

Foreign portfolio investors (FPIs) have continued to pare exposure to Indian assets, contributing to currency pressure. Over the past month, FPIs have been net sellers in both equity and debt segments amid global rate uncertainty and higher US Treasury yields.

Analysts indicated that despite the rupee’s short-term recovery, broader concerns remain. The Reserve Bank of India (RBI) is expected to continue its vigilant intervention strategy to prevent excessive volatility, especially in the run-up to key domestic and global economic data releases.

Outlook

The rupee is likely to remain range-bound in the near term, with traders watching for cues from US economic data, oil price movement, and further signals on the RBI's monetary stance. While Monday’s opening marked a break from the losing streak, analysts suggested that the outlook remains cautious due to external headwinds and persistent FPI outflows.

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