Rupee falls 27 paise to 95.79 against US dollar in early trade

The Indian rupee fell 27 paise to 95.79 against the US dollar in early trade on Friday, impacted by high crude oil prices and foreign portfolio withdrawals. Forex traders noted that while the nation's substantial foreign exchange reserves, Reserve Bank's active intervention, and robust domestic growth provide significant support, rising global yields and crude oil trading above $108 continue to burden the country's import expenses.

At the interbank foreign exchange market, the rupee initiated at 95.70 against the US dollar, then declined to reach 95.79, marking a loss of 27 paise from its prior close. Thursday saw the rupee depreciate by 44 paise, closing at 95.52 against the US dollar. The rupee's plight persists, remaining in an uptrend above 95 due to expensive oil and foreign portfolio outflows, with 96 potentially on the horizon, as 95 now acts as support.

Anindya Banerjee, Head of Commodity and Currency Research at Kotak Securities, commented on the situation. However, the positive factors are real: record foreign exchange reserves, the Reserve Bank's active role in the market, and robust domestic growth of 7.8 percent. Nonetheless, the import bill remains the primary driver in the short term, given crude oil's price above $100 and global yields on the rise.

Investors will monitor US and Indian inflation data for more insights. Meanwhile, the dollar index, which measures the dollar's strength against a group of six currencies, was trading at 99.16, up 0.12 percent. Brent crude, the global oil benchmark, dipped slightly by 0.76 percent to $108.45 per barrel in futures trade, as US-Iran tensions escalate and concerns about oil flow disruptions through the Strait of Hormuz loom.

On the domestic stock market, the Sensex dropped 628.24 points to 74,257.69 in early trade, while the Nifty fell 221.20 points to 23,255.10. Foreign Institutional Investors (FIIs) sold equities worth Rs 438.24 crore on a net basis on Thursday, as per exchange data.