Rupee falls to 95.28 against US dollar as crude oil prices rise

The rupee fell 21 paise to close provisionally at 95.28 against the US dollar on Wednesday, pressured by a stronger greenback and rising crude oil prices. Elevated US Treasury yields and foreign investment flows remained key factors influencing currency movements

Mumbai:The rupee depreciated 21 paise to close at 95.28 (provisional) against the US dollar on Wednesday, weighed down by a stronger US dollar and rising crude oil prices.

Forex traders said the rupee was expected to trade with a slight negative bias amid a strong dollar and positive US Treasury yields. Elevated crude oil prices could also put pressure on the domestic currency.

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In the interbank foreign exchange market, the rupee opened at 95.01 against the dollar, then weakened to touch an intraday low of 95.29 before settling at 95.28 (provisional), down 21 paise from its previous close.

On Tuesday, the rupee had appreciated 8 paise to close at 95.07 against the US dollar.

“Elevated oil prices remain a source of underlying dollar demand, while foreign investment flows, the global dollar and the RBI’s market operations will influence the pace and direction of currency moves,” said Anindya Banerjee, Head of Commodity and Currency Research at Kotak NEO.

Banerjee said the US Federal Reserve remained the immediate common trigger across these markets. “A firmer-than-expected message on December could support the dollar and yields, putting pressure on precious metals and emerging-market currencies,” he said.

“For India, the combination of elevated oil prices and high US yields remains particularly relevant because it affects both import-related dollar demand and international capital flows,” Banerjee added.

Meanwhile, the dollar index, which measures the greenback’s strength against a basket of six currencies, was trading 0.08 per cent higher at 102.40.

Brent crude, the global oil benchmark, was trading 1.06 per cent higher at USD 115.08 per barrel in futures trade.

Traders said any intervention by the Reserve Bank of India could support the rupee at lower levels. Investors would also watch the Federal Open Market Committee’s (FOMC) decision, they added.

On the domestic equity market, the Sensex declined 352.64 points to settle at 73,246.03, while the Nifty fell 50.90 points to 22,698.85.

Foreign Institutional Investors (FIIs) bought equities worth Rs 4,240.39 crore on a net basis on Tuesday, according to exchange data.