The Indian rupee continued its downward trajectory against the US dollar on Tuesday morning, depreciating by 18 paise to 96.38 in early trade. The decline was driven by mounting concerns over rising crude oil prices and ongoing tensions in the Middle East, which dampened market sentiment.
Rupee under pressure from global factors
Since the onset of the Iran conflict in late February, the rupee has lost over 5% of its value, with a 2.2% decline recorded in the past week alone. In the previous session on Monday, the rupee opened at 96.19 before slipping to an all-time low of 96.39 against the US dollar. Last week, the currency breached the 96-per-dollar mark on Friday before settling at 95.81.
Forex traders attributed the persistent uncertainty in global markets to simmering geopolitical tensions between the US and Iran. They noted that elevated crude oil prices are exerting additional strain on emerging market economies like India, as higher import costs lead to increased dollar outflows, coupled with ongoing foreign portfolio investor-related pressure.
Analyst outlook and RBI intervention
Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, stated: "We expect the rupee to trade with a negative bias amid a strong dollar and rising US treasury yields. Ongoing geopolitical tensions and FII outflows may also pressure the rupee. However, any intervention by the RBI and certain restrictions on the import of gold and silver may support the rupee at lower levels. USDINR spot price is expected to trade in a range of 96 to 96.60."
Exchange data revealed that Foreign Institutional Investors remained net buyers for a third consecutive session on Monday, purchasing equities worth Rs 2,813.69 crore.
Equity markets open higher
Meanwhile, Dalal Street started the session on a positive note, with benchmark indices gaining 0.3% in early trading. Around 9:55 AM, the NSE Nifty50 stood at 23,682.40, up 34.90 points or 0.15%, while the BSE Sensex jumped to 75,471.46, adding 156.42 points or 0.21%.
