Rupee Falls to 95.38 vs USD Amid West Asia Tensions

The Indian rupee depreciated by 8 paise to 95.38 against the US dollar in early trade on Tuesday. This decline was primarily influenced by the ongoing West Asia crisis and a fall in domestic equity markets.

• Rupee Opening: 95.38 against US dollar
• Previous Close (Monday): 95.30 against US dollar (down 13 paise)
• Dollar Index: 99.77 (down 0.04%)
• Brent Crude Futures: USD 87.67 per barrel (down 0.06%)
• Sensex Early Trade: Down 320.14 points to 78,204.40
• Nifty Early Trade: Down 94.35 points to 24,490.85
• FII Net Equities Purchase (Monday): ₹1,974.76 crore

Global market tensions, exacerbated by the West Asia crisis, pushed crude oil prices higher overnight, directly impacting the local unit. This geopolitical uncertainty maintained pressure on the rupee throughout the trading session.

Domestically, the early trade decline in the Indian equity markets further contributed to the rupee’s depreciation. However, crucial support came from foreign institutional investor (FII) inflows and timely intervention by the Reserve Bank of India (RBI).

RBI Intervention Curbs Further Slide

Forex traders noted the RBI’s strategic role, with state-run banks reportedly selling dollars on the central bank’s behalf to contain the downside. Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, stated that Monday’s rupee movement remained in a relatively narrow range despite Brent crude rising towards $84 due to this intervention.

Bhansali added that Brent crude has since surpassed $87 per barrel, driven by continued uncertainty surrounding the Strait of Hormuz. Fading hopes of a swift resolution between Iran and the US are contributing to this elevated oil price environment.

The interplay of global geopolitical risks, fluctuating crude oil benchmarks, and domestic market dynamics continues to shape the rupee’s trajectory. Market participants will closely monitor developments in West Asia and central bank actions for future direction.