Rupee Slips 7 Paise to 95.40 Against US Dollar in Early Trade
Mumbai: The Indian rupee has begun the day on a weaker note, depreciating 7 paise to 95.40 against the US dollar in early trade on Thursday. This decline is largely attributed to the persistent threat of elevated crude oil prices and lingering geopolitical risks.
Elevated Crude Oil Prices and Geopolitical Risks Weigh Heavy
Forex traders are warning that investor sentiment remains fragile due to the ongoing standoff between the US and Iran. The situation is further complicated by Iran’s warning that it will keep the Strait of Hormuz closed until 2029, while the US President has stated that the Hormuz is under US command. This heightened tension is putting pressure on the rupee, making it vulnerable to fluctuations in the global market.
Interbank Foreign Exchange Market: Rupee Opens at 95.40
At the interbank foreign exchange market, the rupee opened at 95.40, marking a decline of 7 paise from its previous close. This is a significant drop, considering the rupee had closed at 95.33 against the US dollar on Wednesday. The rupee’s value is also being impacted by the dollar index, which is trading at 100.01, indicating the greenback’s strength against a basket of six currencies.
Oil Prices and Dollar Index: A Mixed Bag
Brent crude, the global oil benchmark, is trading lower by 1.22 per cent at USD 87.89 per barrel in futures trade. However, the dollar index is higher at 100.01, which is putting pressure on the rupee. According to Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, “RBI has been continuously backing the rupee at 95.41-95.45 despite oil demand taking it lower.”
Foreign Institutional Investors Offload Equities
Foreign institutional investors have offloaded equities worth Rs 1,002.50 crore on a net basis on Wednesday, according to exchange data. This decline in foreign investment is also contributing to the rupee’s weakness.
Domestic Equity Market: Sensex and Nifty Trading Lower
On the domestic equity market front, the Sensex is trading lower by 152.97 points at 77,813.38, while the Nifty is down 84.80 points at 24,351.15. This decline in the domestic market is also impacting the rupee’s value, making it more vulnerable to fluctuations.
Expert Analysis
Anil Kumar Bhansali’s analysis highlights the RBI’s efforts to support the rupee, despite the challenges posed by oil prices and geopolitical risks. However, the ongoing standoff between the US and Iran, along with the decline in foreign investment, is likely to continue putting pressure on the rupee in the short term.
As the situation unfolds, it will be interesting to see how the rupee responds to these challenges and whether the RBI’s efforts to support the currency will be enough to stabilize its value.