Rupee slips 8 paise against US dollar amid rising crude oil prices

The rupee weakened by 8 paise against the US dollar in early trade amid rising crude oil prices and renewed geopolitical tensions following fresh US strikes on Iran. Investors are also closely watching the upcoming RBI monetary policy meeting for cues on interest rates.

Mumbai: The rupee slipped 8 paise to 95.78 against US dollar in early trade on Wednesday on elevated crude oil prices as fresh US strikes dampened optimism for an imminent US-Iran peace deal.

Forex traders said escalating US-Iran conflict is again boosting safe-haven demand for the dollar.

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Moreover, Brent oil remained well bid at USD 98 levels as risk aversion, geopolitical risk and war clouds in West Asia kept it higher.

At the interbank foreign exchange market, the rupee opened on a positive note at 95.60, but soon pared the gains and fell to 95.78 against the American currency, registering a fall of 8 paise from its previous close.

On Tuesday, the rupee depreciated 44 paise to close at 95.70 against the US dollar.

“The rupee slipped after crude oil prices rebounded as hopes of an immediate US–Iran peace deal faded slightly. Reports of renewed US strikes on Iran and delays in negotiations kept markets cautious, even though investors still believe a broader resolution remains possible,” CR Forex Advisors MD Amit Pabari said.

Now, attention shifts toward the upcoming RBI Monetary Policy Committee meeting scheduled for June 3-5.

“Markets remain divided between a possible rate hike and a status quo decision. The larger question, however, is whether RBI may choose to prioritise currency stability alongside inflation management.

“With the central bank already using several measures to manage rupee volatility, interest rates could also become part of the broader strategy to attract inflows back into the system,” Pabari added.

The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading at 99.09, down 0.07 per cent.

Brent crude, the global oil benchmark, was trading down 1.50 per cent at USD 98.09 per barrel in futures trade after reports that the US had carried out fresh attacks against Iran, offsetting hopes of a deal to reopen the Strait of Hormuz.

On the domestic equity market front, Sensex climbed 127.83 points to 76,137.53 in early trade, while the Nifty was up 36.45 points to 23,950.15.

Foreign institutional investors offloaded equities worth Rs 2,407.87 crore on Tuesday, according to exchange data.