Rupee Declines 5 Paise to 94.98 Against US Dollar Amid West Asia Tensions and High Crude Prices

The Indian rupee traded in a narrow range and depreciated by 5 paise to 94.98 against the US dollar in early trade on Monday. Market participants noted that the currency opened on a negative note due to risk aversion in global markets resulting from escalating tensions in West Asia.

At the interbank foreign exchange market, the rupee opened at 94.92 before losing ground to touch 94.98, marking a decline of 5 paise over its previous close. On Friday, the local currency had depreciated for the second consecutive session, falling 12 paise to close at 94.93 against the greenback.

Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, noted that while the rupee faced pressure from elevated crude oil prices and Middle East tensions, softness in the US dollar and US treasury yields helped cushion the downside. Analysts expect the currency to maintain a slight negative bias amid ongoing global risk aversion, sustained high crude prices, and potential selling pressure from foreign institutional investors. However, a weak US dollar and possible intervention by the Reserve Bank of India (RBI) are seen as potential supports at lower levels.

In broader global markets, the dollar index—which measures the greenback's strength against a basket of six currencies—traded lower by 0.15 per cent at 101.49. Meanwhile, Brent crude futures rose 1.92 per cent to $114.48 per barrel.

Domestic equities also experienced downward pressure during early trade. The BSE Sensex dropped 536.30 points to 72,583.86, while the NSE Nifty fell 200.10 points to 22,402.80. Exchange data showed that Foreign Institutional Investors (FIIs) purchased equities worth ₹887.65 crore on a net basis on Friday.

Additionally, data released by the RBI on Friday indicated that India's foreign exchange reserves declined by $5.011 billion to $721.016 billion during the week ended October 16. In the prior reporting week, the reserves had dropped by $8.578 billion to $726.027 billion.

"The recent depreciation of the rupee underscores the direct impact of global macroeconomic factors, particularly fluctuating crude oil prices and geopolitical tensions in West Asia, on domestic financial stability. For businesses, especially startups dependent on imports or international supply chains, currency volatility introduces cost uncertainties that require careful financial planning and hedging strategies. Monitoring central bank interventions and global currency trends remains crucial for navigating these external economic pressures." — Dr. Shishir Gupta, Founder & CEO, StartupLanes