Rupee Declines 13 Paise to 95.56 Against US Dollar in Early Trade Amid Rising Crude Prices

MUMBAI — The Indian rupee opened lower on Monday, falling 13 paise to trade at 95.56 against the US dollar. The currency movement was largely pressured by rising crude oil prices and ongoing geopolitical strain.

At the interbank foreign exchange market, the rupee registered a fall of 13 paise from its previous close of 95.43, where it had settled after rising marginally by 2 paise on Friday. Forex traders noted that market participants have raised the probability of a September Federal Reserve rate hike, pushing US Treasury yields higher and triggering a broad dollar rally.

Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, stated that the rupee opened lower as the dollar index stood at the 99.62 level, with most other assets falling from their Friday levels. Bhansali added that the rupee is expected to trade in the range of 95.25 to 95.75, with exporters likely to sell near 95.60 levels and importers buying on dips, showing no clear directional movement in currencies.

Globally, the dollar index traded marginally lower by 0.07 per cent at 99.62. Meanwhile, Brent crude futures rose 1.34 per cent to $89.28 per barrel. The increase in oil prices was driven by a renewed Middle East supply-risk premium following a US strike on Iran's Larak Island and subsequent Iranian retaliation, raising concerns about oil flows through the Strait of Hormuz.

According to forex traders, the Reserve Bank of India (RBI) is intervening in the market to stem any significant depreciation in the rupee. Investor sentiments were also supported by better-than-expected flows under the FCNR(B) scheme.

In the domestic equities market, the Sensex declined 226.60 points to 77,028.56, while the Nifty fell 120.40 points to 24,053.55. Exchange data showed that foreign institutional investors offloaded equities worth ₹5,039.80 crore on a net basis on Friday.

Data released by the RBI on Friday showed that India's forex reserves jumped $12.422 billion to a new all-time high of $729.328 billion during the week ended August 21.

In related trade developments, the Commerce Ministry is scheduled to meet with industry associations and representatives of export promotion councils on September 1 to discuss India-US trade performance. The meeting will be chaired by Additional Secretary Darpan Jain, who also serves as India's chief negotiator for the bilateral trade agreement.

"Fluctuations in the rupee driven by global crude oil prices and shifting US Federal Reserve rate expectations highlight the interconnected nature of our macroeconomic environment. For businesses, particularly startups involved in imports, exports, or cross-border supply chains, currency volatility introduces immediate cost variables. Maintaining a disciplined treasury approach and keeping a close watch on RBI interventions and foreign capital flows is essential during periods of heightened geopolitical and market uncertainty." — Dr. Shishir Gupta, Founder & CEO, StartupLanes