Rupee Weakens 27 Paise to 95.79 as Oil Prices and Portfolio Outflows Weigh

The rupee weakened 27 paise to 95.79 per US dollar in early trade on Friday, pressured by elevated crude oil prices and foreign portfolio outflows.

Forex traders said strong foreign exchange reserves, active intervention by the Reserve Bank of India, and robust domestic growth continue to provide support. However, rising global yields and crude oil trading above $108 remain significant headwinds for the country’s import bill.

At the interbank foreign exchange market, the rupee opened at 95.70 against the US dollar before slipping to 95.79.

On Thursday, the rupee depreciated 44 paise to close at 95.52 against the US dollar.

Anindya Banerjee, head of commodity and currency research at Kotak Securities, said sustained pressure from expensive oil and foreign portfolio outflows has kept the rupee in an uptrend beyond 95. He added that the currency could test 96, with 95 now acting as support.

He said record foreign exchange reserves, the Reserve Bank’s market participation, and strong domestic growth of 7.8 per cent provide meaningful offsets. Nevertheless, with crude oil above $100 and global yields increasing, the import bill is likely to dominate near-term currency sentiment.

Investors are expected to monitor inflation data from India and the US for further direction.

Meanwhile, the dollar index, which tracks the greenback against a basket of six currencies, was up 0.12 per cent at 99.16.

Brent crude, the global oil benchmark, traded 0.76 per cent lower at $108.45 per barrel in futures. The decline came amid escalating US-Iran tensions and concerns that oil flows through the Strait of Hormuz could be disrupted.

On the domestic equities front, the Sensex fell 628.24 points to 74,257.69 in early trade, while the Nifty declined 221.20 points to 23,255.10.

According to exchange data, foreign institutional investors sold equities worth Rs 438.24 crore on a net basis on Thursday.

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