Rupee Stages An Early Recovery, Climbs 13 Paise To 95.65 Against The US Dollar

Mumbai witnessed an early rally for the Indian rupee on Tuesday, as it climbed 13 paise to 95.65 against the US dollar. The strengthening was driven by bolstering domestic equity sentiment and a dip in crude oil prices. At the interbank foreign exchange market, the rupee opened at 95.75 and then rose to 95.65 against the dollar, marking a 13-paise increase from Monday's closing level of 95.78.

Forex traders linked the early recovery to the retreat of crude oil from high levels, eased by improved supply concerns. Saudi Arabia reportedly ramped up exports via the Strait of Hormuz, and investors remained optimistic that the damaged East-West pipeline would see partial restoration. However, the dollar's firmness due to the Federal Reserve's interest rate hike and ongoing foreign portfolio outflows capped the rupee's gains.

Anindya Banerjee, Head of Commodity and Currency Research at Kotak Securities, noted that softer crude prices were aiding the rupee. He anticipates the currency to stay within a tight range, with 95.50 and 95 acting as support, while 96.30 could serve as an upper limit. The Reserve Bank of India may step in with significant intervention if the dollar-rupee pair nears 96.30-96.50.

Meanwhile, India's crude oil import bill surged by 48% to $74.8 billion during April-August amid global price surges. The Reserve Bank has been absorbing excess liquidity via special deposit inflows, executing bond sales, and reverse-repo auctions. The dollar index slipped 0.07% to 100.35, while Brent crude futures rose 1.05% to $101.39 per barrel following their recent dip.

Indian equities opened on a positive note, with the Sensex surging 42.51 points to 74,901.50 and the Nifty climbing 39.75 points to 23,454.05. Foreign institutional investors divested domestic shares worth ₹576.20 crore on Monday. Additionally, India's eight core sectors expanded by 4.8% in August, a slowdown from July's 5% and a year-on-year 6.2%.