Rupee Declines 12 Paise to 94.50 Against US Dollar in Early Trade

The Indian rupee depreciated 12 paise to 94.50 against the US dollar in early trade on Thursday, weighed down by weak domestic markets and elevated crude oil prices.

According to forex analysts, the rupee began trading on a flat-to-lower trajectory due to sluggish domestic equities and surging crude oil prices. However, the downside remained cushioned by a softer US dollar and declining US Treasury yields.

At the interbank foreign exchange market, the rupee opened at 94.47, then lost ground to touch 94.50, lower by 12 paise over its previous close. On Wednesday, the rupee had surged 53 paise to close at 94.38 against the US dollar.

Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, noted that the rupee is expected to trade with a slight positive bias on IPO-related foreign inflows and weakness in the dollar. Softening of US Treasury yields and reports that Russia is ready for new peace talks may also support the currency. Traders are also expected to take cues from weekly unemployment claims data from the US.

The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading lower by 0.21 percent at 101.56. Meanwhile, Brent crude, the global oil benchmark, was trading higher by 1.58 percent at $110.54 per barrel in futures trade.

Anindya Banerjee, Head of Commodity and Currency Research at Kotak NEO, stated that the rupee remains finely balanced within the 94 to 97 range. According to Banerjee, the RBI has bought itself time, the Jio IPO has added near-term dollar supply, and a US trade agreement could strengthen the structural inflow story. However, he cautioned that if portfolio selling accelerates again or crude makes a decisive move towards USD 120, that balance will be tested.

On the domestic equity market front, the Sensex fell 642.51 points to 73,067.18 in early trade, while the Nifty declined 241.35 points to 22,570.90. Exchange data showed that Foreign Institutional Investors (FIIs) purchased equities worth ₹1,022.32 crore on a net basis on Wednesday.

"Currency fluctuations and rising crude oil prices directly impact input costs and capital planning for businesses operating in India. While domestic equity markets face short-term corrections and global commodity pressures test macroeconomic balances, incoming foreign inflows from major public offerings provide a crucial cushion. Founders and business leaders must factor these macroeconomic variables into their financial strategies, closely monitoring currency stability and inflation trends as they manage growth and expansion." — Dr. Shishir Gupta, Founder & CEO, StartupLanes