The Indian rupee fell by 9 paise to 94.94 against the US dollar in early trade on Thursday, weighed down by a strong American currency and rising crude oil prices. At the interbank foreign exchange, the domestic unit opened at 94.90 and then slipped further to 94.94, registering a decline of 9 paise over its previous close.
Factors Behind the Decline
Forex traders said the rupee depreciated as the US dollar strengthened against major currencies overseas. Additionally, elevated crude oil prices continued to put pressure on the Indian currency, as India is a major importer of oil. The dollar index, which gauges the greenback's strength against six major currencies, rose 0.12% to 104.84.
Impact of Global Cues
Meanwhile, global oil benchmark Brent crude futures climbed 0.45% to $85.43 per barrel. Traders are also keeping an eye on the US Federal Reserve's monetary policy stance, which could influence dollar movements. On the domestic front, the 30-share BSE Sensex was trading 125.86 points higher at 74,126.02, indicating positive investor sentiment despite the rupee's weakness.
Foreign institutional investors (FIIs) were net sellers in the capital market on Wednesday, offloading shares worth Rs 1,234.56 crore, as per exchange data. The rupee had closed at 94.85 against the US dollar in the previous session.
Market Outlook
Analysts expect the rupee to remain under pressure in the near term due to persistent dollar demand and geopolitical uncertainties. However, any intervention by the Reserve Bank of India (RBI) could provide some support to the currency. The RBI has been actively managing forex volatility to prevent sharp fluctuations.
