Rupee falls 25 paise to 95.33 as crude oil crosses USD 100

The rupee fell 25 paise to 95.33 against the US dollar in early trade as Brent crude crossed USD 100 per barrel. Elevated oil prices, persistent dollar demand and global tensions raised concerns over India’s import bill and currency

Mumbai: The rupee depreciated 25 paise to 95.33 against the US dollar in early trade on Thursday as Brent crude prices crossed the USD 100-per-barrel mark, sharply increasing concerns over India’s import bill.

Forex traders said elevated crude oil prices and persistent dollar demand also weighed on investor sentiment.

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At the interbank foreign exchange market, the rupee opened at 95.15 against the US dollar, then lost ground to touch 95.33 against the American currency, registering a loss of 25 paise from its previous close.

On Wednesday, the rupee slumped 34 paise to close at 95.08 against the American currency.

“Rupee’s move beyond the psychologically important 95 level also triggered some additional dollar demand and stop-loss activity. However, the decline was contained by RBI intervention,” said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading at 98.72, down 0.09 per cent.

Brent crude, the global oil benchmark, was trading marginally lower by 0.23 per cent at USD 100.98 per barrel in futures trade amid escalating US-Iran tensions and fears of disruption to oil flows through the Strait of Hormuz.

“For an economy that imports nearly 90 per cent of its crude, every USD 10 rise in oil can add roughly USD 12-15 billion to the annual import bill, putting further pressure on the current account and the rupee. With FCNR-related dollar inflows no longer available to offset this pressure, sustained high oil prices could weigh more heavily on the currency,” CR Forex Advisors MD Amit Pabari said.

The rupee is entering a phase where the temporary support from FCNR-related flows has largely faded, while global headwinds are becoming stronger.

“The break above 95.00 is technically significant. The expectation is that if USD/INR sustains above 95, the probability of a move towards 95.50 has increased, followed by 96.00 if the momentum continues,” Pabari added.

On the domestic equities market front, the Sensex was trading marginally up by 38.07 points at 74,809.95 in early trade, while the Nifty was higher by 9.85 points at 23,439.20.

Foreign Institutional Investors (FIIs) offloaded equities worth Rs 582 crore on a net basis on Wednesday, according to exchange data.