The rupee rises 10 paise to Rs 96.65 against the US dollar in early trade. The recovery came amid likely intervention by the Reserve Bank of India (RBI). The move helped the currency hold ground despite continued market pressure.
The rupee had opened at Rs 96.71 in the interbank foreign exchange market before recovering to Rs 96.65. It had closed at Rs 96.75 against the dollar on Wednesday.
The rupee rises as traders watch the RBI's role closely amid pressure from a stronger US dollar, higher crude prices and foreign fund outflows.
Forex traders said the currency remains under pressure from several global and domestic factors. The dollar index was trading near multi-month highs, while Brent crude remained above the USD 102-a-barrel level.
The dollar index stood at 102.25, gaining 0.01% against a basket of six major currencies. Brent crude futures rose 2.17% to USD 102.37 per barrel.
Concerns over supply disruptions through the Strait of Hormuz have kept crude prices elevated. Rising oil prices are a concern for India because the country depends heavily on imports to meet its energy requirements.
Key Highlights:
- The rupee recovered 10 paise to Rs 96.65 against the US dollar.
- RBI intervention may have helped limit further losses in the currency.
- Brent crude climbed 2.17% to USD 102.37 amid supply disruption concerns.
Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, said strong corporate demand for dollars and safe-haven capital shifts had pushed USD/INR higher.
He added that routine interventions by state-run banks helped prevent further losses. Market participants are now watching the RBI for action against speculation in the USD/INR pair.
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Forex Reserves, FII Outflows Add to Currency Pressure
India's foreign exchange reserves have also emerged as a concern for investors. Reserves have fallen by USD 50 billion in three weeks from their September peak of $786 billion. Forex traders said the RBI Governor has assured markets that the central bank would help the rupee find its true value. The currency is currently considered undervalued by some market participants.
Bhansali said the latest rebound in crude prices was driven by persistent concerns over supply and shipping disruptions in the Middle East. He pointed to attacks on tankers in the Gulf and around the Strait of Hormuz as key factors. Domestic equities also opened lower on Thursday, adding to the pressure on investor sentiment. The BSE Sensex fell 264.97 points to 72,408.15 in early trade. The NSE Nifty50 declined 87.50 points to 22,507.65.
Foreign Institutional Investors (FIIs) were also net sellers in Indian equities on Wednesday. According to exchange data, they sold shares worth Rs 6,121.37 crore. For now, the rupee rises against the dollar, but sustained recovery could depend on RBI intervention, global oil prices, dollar strength and foreign capital flows.
