Rupee Weakens as Oil Prices and Foreign Outflows Persist

The Indian rupee weakened by 5 paise to close at 96.30 (provisional) against the US dollar on Monday. The depreciation was driven by higher oil prices and ongoing foreign fund outflows, keeping the currency near the crucial 96 level. Forex traders noted that while a positive risk-on sentiment provided some support, the focus remains on foreign capital flows and the Reserve Bank of India’s upcoming monetary policy decision.

During intraday trading, the rupee opened at 96.20 but declined to touch a low of 96.31 before settling at 96.30. Last Thursday, the rupee had dropped below the psychologically significant 96-per-dollar mark to close at 96.25.

Analysts expect the rupee to remain range-bound between 95.95 and 96.50 in the near term, with a slight upward bias. The RBI’s Monetary Policy Committee began its three-day meeting on Monday, with expectations of a 25-basis-point rate hike to combat inflation risks exacerbated by escalating conflict in West Asia. The last repo rate hike was in February 2023, when the rate was raised to 6.50%.

Meanwhile, the dollar index rose by 0.25% to 102.18, while Brent crude climbed 0.22% to $102.48 per barrel. On the equity front, the Sensex surged 472.77 points to 72,382.47, and the Nifty gained 133.80 points to 22,555.75. Foreign Institutional Investors sold equities worth ₹9,484.22 crore on Thursday.