Rupee Declines 7 Paise Against US Dollar in Early Trade Amid Rising Crude Prices

The Indian rupee depreciated 7 paise to 95.68 against the US dollar in early trade on Tuesday, weighed down by elevated crude oil prices and consistent dollar demand from oil companies. At the interbank foreign exchange, the currency opened at 95.68, down from its previous close. On Monday, the rupee had depreciated 19 paise to close at 95.61 against the US dollar.

According to forex traders, Brent crude trading near $91 per barrel increased oil-related dollar demand. Additionally, concerns regarding future dollar inflows were raised following the Reserve Bank's earlier-than-expected closure of the concessional FCN(B) forex-swap facility.

Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, noted that the rupee opened lower as oil prices rose amid ongoing tensions between the US and Iran over the Strait of Hormuz, with no progress reported on a peace deal.

Meanwhile, the dollar index, which measures the strength of the greenback against a basket of six currencies, traded at 99.63, down 0.01 per cent. Brent crude, the global oil benchmark, traded higher by 0.52 per cent at $91.34 per barrel in futures trade.

Bhansali added that the rupee remains vulnerable to rising oil prices staying close to $90 and moving above $91 per barrel. He observed that while the Reserve Bank of India appeared to protect the 95.61 level on Monday and may defend 95.75, it is likely to allow depreciation to continue given rising oil prices and consistent demand.

On the domestic equity front, market indices saw a downward trend in early trade. The Sensex traded down 278.32 points at 77,450.64, while the Nifty fell 57.65 points to 24,230.45. Exchange data showed that foreign institutional investors offloaded equities worth ₹2,535.10 crore on a net basis on Monday.

"The depreciation of the rupee, driven by rising crude oil prices and foreign capital outflows, highlights the macro-level pressures impacting the broader domestic business ecosystem. For businesses, particularly startups and enterprises dependent on imports or foreign capital, currency volatility and rising energy costs necessitate tighter cash flow management and robust risk mitigation strategies. Monitoring global commodity trends and forex movements is increasingly critical for financial planning." — Dr. Shishir Gupta, Founder & CEO, StartupLanes