Rupee falls 2 paise to close at 94.97 against US dollar

On Wednesday, the Indian rupee closed at 94.97 against the US dollar, marking a marginal loss of 2 paise. This decline was attributed to foreign capital inflows being offset by weak local equities and a strong US dollar. Forex traders noted that the Reserve Bank of India (RBI) was monitoring the rupee's fall, as Brent crude prices had increased to $95 per barrel and the dollar index hovered around 99.80 due to renewed US-Iran tensions.

Additionally, concerns over a potential US Federal Reserve interest rate hike in September led to higher US Treasury yields, contributing to a broader dollar rally. Investor sentiment was also affected by US economic data, with the 10-year US Treasury yields surpassing 4.8 percent, the highest level since January 2025. At the interbank foreign exchange market, the rupee opened at 94.97 and fluctuated between 94.83 and 94.99 throughout the day.

The bank expects the rupee to exhibit a slight negative bias in the coming days due to ongoing geopolitical tensions, with hawkish remarks from Federal Reserve Chair Kevin Warsh potentially further pressuring the rupee. However, any de-escalation of tensions could support the rupee at lower levels. Traders will monitor ADP non-farm payrolls and factory orders data from the US for insights.

The dollar index, which measures the greenback's strength against a basket of currencies, stood at 99.82, up 0.14 percent. Brent crude, the global oil benchmark, rose 0.44 percent to $95.07 per barrel due to concerns over potential disruptions in crude supplies through the Strait of Hormuz. On the domestic market, the Sensex fell 373.93 points to 76,570.35, while the Nifty dropped 141.35 points to 23,914.45.

Foreign institutional investors bought equities worth ₹1,143.38 crore on a net basis the previous day.