Rupee settles flat at 94.97 against US dollar amid weak domestic equities

The Indian rupee closed marginally lower by 2 paise at 94.97 against the US dollar on Wednesday. The currency faced pressure from weak local equities, rising crude oil prices, and a stronger dollar index driven by geopolitical tensions.

The Indian rupee registered a marginal loss of 2 paise, settling provisionally at 94.97 against the US dollar on Wednesday at the interbank foreign exchange market. During the trading session, the currency opened at 94.97, touching an intraday high of 94.83 and a low of 94.99.

Market participants noted that foreign capital inflows provided some support, but this was negated by weak domestic equities and a strengthening US dollar. Forex traders reported that the Reserve Bank of India is closely monitoring the rupee's movement as global macroeconomic and geopolitical factors unfold.

Global crude oil prices rose to $95 per barrel, driven by concerns over potential supply disruptions through the Strait of Hormuz following renewed US-Iran tensions. Meanwhile, the dollar index hovered around 99.80, supported by risk aversion and rising US Treasury yields. The 10-year US Treasury yields rose above 4.8 per cent—marking the highest level since January 2025—following softer-than-anticipated US economic data and expectations regarding US Federal Reserve interest rate decisions.

On the domestic front, equity markets faced downward pressure. The BSE Sensex declined by 373.93 points to close at 76,570.35, while the NSE Nifty fell 141.35 points to settle at 23,914.45. Despite the market downturn, exchange data showed that foreign institutional investors were net buyers, purchasing equities worth ₹1,143.38 crore on Tuesday.

Commenting on the near-term outlook, Anuj Choudhary, Research Analyst at Mirae Asset ShareKhan, stated that the rupee is expected to trade with a slight negative bias amid geopolitical tensions and higher crude oil prices, with the USD-INR spot price projected to range between 94.70 and 95.25.

"Fluctuations in the foreign exchange market and rising crude oil prices directly impact input costs and operational expenses for businesses across sectors, including the startup ecosystem. Founders and business leaders must maintain robust treasury management and hedge against currency volatility. As macroeconomic headwinds like shifting US yields and geopolitical tensions influence capital flows, maintaining disciplined financial planning remains critical for sustainable growth." — Dr. Shishir Gupta, Founder & CEO, StartupLanes