Rupee Slips to ₹85.39 as Firm Crude Prices Offset Dollar Weakness
Crude Oil Strength Weighs on Domestic Currency The Indian rupee opened lower at ₹85.39 against the US dollar on Monday, down from its previous close of ₹85.33, as elevated crude oil prices neutralised the impact of a weaker greenback. The local currency has come under pressure amid renewed concerns about India’s import bill, with Brent crude holding firm near $64.83 per barrel.
Oil’s upward momentum follows rising geopolitical tensions in the Middle East and signs of tightening supply, which continue to challenge emerging market currencies. India, being a major net importer of crude, remains particularly sensitive to such price dynamics, as costlier oil tends to widen the current account deficit and fuel inflationary risks.
Dollar Weakness Offers Limited Support
Despite global dollar weakness, evident from the dollar index retreating below 104 levels, the rupee failed to capitalise due to the overriding influence of higher energy costs. The US dollar has eased as investors recalibrate expectations of the Federal Reserve’s interest rate trajectory following recent soft economic data.
However, market participants note that the benefit of dollar softness is being offset by persistent demand for the US currency from importers and oil companies, which has curtailed any upside for the rupee. Moreover, month-end corporate demand and capital outflows from the domestic equity market are adding to the pressure on the Indian unit.
Equity Market Cues and FII Activity
The domestic equity indices opened on a cautious note, offering little support to the rupee. Foreign institutional investors (FIIs) have remained net sellers over recent sessions, pulling capital from risk assets amid global uncertainty and shifting yield differentials. Such outflows have dampened forex sentiment and contributed to the rupee’s near-term weakness.
With foreign exchange reserves remaining stable, the Reserve Bank of India (RBI) is expected to continue its measured interventions to smoothen volatility without altering directional movement significantly.
Near-Term Outlook
Currency traders are closely watching key global economic indicators and central bank commentary for cues. Domestically, inflation trends, monsoon forecasts, and fiscal data will influence sentiment, alongside crude oil movements. The rupee is expected to trade within a narrow range of ₹85.20 to ₹85.60 in the near term, with heightened sensitivity to commodity price shocks and external liquidity factors.
In summary, while the weakening dollar provides marginal relief, the upward trajectory of oil prices remains the dominant headwind for the rupee. Market participants are likely to remain guarded as macroeconomic risks and global developments unfold.
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