Rupee slips 7 paise against US dollar as crude soars beyond $90 per barrel levels

On Tuesday, the Indian rupee continued its decline against the US dollar, dropping 7 paise to 95.68 in early trade, according to wire material. The currency had already lost 19 paise in the previous session, closing at 95.61 on Monday. The opening price on Tuesday was 95.68 at the interbank foreign exchange market. Market participants attributed the currency's weakness to higher oil prices and steady demand for the greenback.

Brent crude was trading above $91 per barrel, with futures up 0.52% at $91.34 a barrel. Forex traders noted that the higher crude prices were driving up demand for dollars associated with oil payments. Additionally, concerns over dollar inflows emerged following the Reserve Bank's premature closure of the concessional FCN (B) forex-swap facility.

Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, commented on the situation, stating that the rupee opened lower as oil prices rose amid the ongoing US-Iran conflict over the Strait of Hormuz, with no progress on a peace deal. He added that the rupee might continue to weaken due to crude prices surpassing the $91 per barrel mark.

Bhansali further explained that the Reserve Bank was protecting the rupee near 95.61 on Monday and may maintain levels around 95.75 today. However, he anticipated that the currency would depreciate further owing to persistent demand from oil companies and the escalating oil prices. The weakness in the currency coincided with a lackluster start for domestic equities, with the Sensex down 278.32 points at 77,450.64 and the Nifty falling 57.65 points to 24,230.45 in early trade.

Moreover, foreign institutional investors continued to offload shares from the equity market, with a net sale of Rs 2,535.10 crore on Monday, as per exchange data.