Rupee climbs to 95.64 against US dollar; Iran sanctions, crude prices in focus

The Indian rupee opened the week on a strong note, appreciating 7 paise to 95.64 against the US dollar at the start of trading. However, the gains were short-lived as geopolitical tensions, crude oil prices and persistent importer demand held the domestic currency back. The currency fluctuated within a narrow band, opening at 95.68 at the interbank forex market and closing at 95.64. On Friday, the rupee had ended at 95.71, reflecting a 3-paise increase from its prior close.

Forex traders pointed to the weaker Dollar Index as a contributing factor to the rupee's rise, but this effect was neutralized by robust Brent crude prices and ongoing dollar demand from importers. Attention was also focused on forthcoming sanctions imposed by Washington on Iran, set to impact the country's oil trade, banking system, and shipping lanes.

This development added to the cautious sentiment in currency and oil markets. The concern extended beyond Iran, as several major economies continued to engage with Iranian trade to some extent. Until the specifics of the sanctions were clear, markets remained wary, according to CR Forex Advisors MD Amit Pabari.

The Dollar Index, which tracks the US dollar's performance against a basket of six currencies, stood at 98.82, marking a 0.03% increase. Brent crude, the global oil benchmark, slipped 1.32% to $93.14 per barrel in futures trading. Equities began the trading session on an upward trajectory, with the BSE Sensex climbing 202.42 points to 77,744.15 and the NSE Nifty rising 55.35 points to 24,309.

Foreign institutional investors showed a net sell stance in the previous session, offloading equities worth Rs 542.71 crore on Friday. India's foreign exchange reserves expanded by $9.905 billion to $716.907 billion during the week ended August 14, as reported by the Reserve Bank of India on Friday.