Rupee falls 6 paise to 95.42 against US dollar in early trade

In early trade on Wednesday, the Indian rupee fell 6 paise to 95.42 against the US dollar, impacted by a significant increase in Brent crude prices nearing USD 90 per barrel. The hopes for a swift US-Iran agreement and the Strait of Hormuz reopening failed to bolster the rupee. Forex traders attributed the surge in Brent crude prices to the uncertainty surrounding the Strait of Hormuz.

The rupee opened at 95.40 and then dropped to 95.42, declining 6 paise from the previous close. On Tuesday, the rupee slipped 6 paise to finish at 95.36 against the US dollar. Given that Brent crude is now close to USD 90 per barrel, INR/USD levels of 95.50 and 95.80–96.00 are of particular interest if oil prices remain high. Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, noted this.

Brent crude experienced a 1% increase, trading at USD 89.80 per barrel in futures trade. The rupee opened at 95.42 with oil prices slightly lower at USD 89.36 per barrel, while the dollar index stood at 99.83, essentially unchanged. Despite foreign companies continually purchasing US dollars to meet daily needs, and the Reserve Bank of India (RBI) continuously supporting the rupee at various levels each day, Bhansali highlighted.

Markets are presently in a wait-and-watch stance before the US inflation data, with the dollar receiving some support from high oil prices, but constrained by expectations that inflation may continue to ease. On the domestic stock market, the Sensex declined 35.99 points to 78,097.31 in early trade, and the Nifty slipped 31.15 points to 24,444.55.

Foreign institutional investors bought equities worth Rs 258.55 crore in total on a net basis, per exchange data.