Rupee near 96 as oil prices and foreign selling weigh
The Indian rupee started the week under pressure, trading near 96 paise against the US dollar. The currency opened at 96.20 on Monday and weakened further to 96.26, down 1 paise from its previous close. High crude oil prices and sustained foreign fund selling are weighing on the rupee, with the Reserve Bank of India (RBI) intervening periodically to limit sharp intraday swings.
The rupee's recent decline follows a sharp fall on Thursday, closing at 96.25 per US dollar, its weakest level in over two months. Analysts expect the rupee to remain under pressure within the 95.50-96.50 range, given oil prices above $100, high US yields, and heavy foreign portfolio selling.
The RBI's foreign exchange reserves dropped by $18 billion to $748 billion, reflecting the central bank's efforts to stabilize the currency. This decline follows a previous drop of $14.881 billion the week before. The RBI's monetary policy committee is set to meet this week, with most economists expecting a 25 basis point rate increase to 5.50%.
Markets are closely watching several developments, including US services data, the Federal Reserve minutes, and the RBI's policy decision on Wednesday. Additionally, any confirmation of damage to Saudi infrastructure could push Brent crude prices higher. Foreign Institutional Investors sold equities worth Rs 9,484.22 crore on Thursday, adding to the pressure on the rupee.
Despite the rupee's struggles, the BSE Sensex rose 413 points to 72,315, and the NSE Nifty gained 131.55 points to 22,554.20 in early trade on Monday.