The Indian rupee depreciated 33 paise to open at 95.95 against the US dollar, marking a significant reversal from Friday's strong performance when it had risen 14 paise to settle at 95.33. According to LiveMint, the currency's weakness comes as mixed global cues and renewed oil price volatility have dampened investor sentiment. The rupee's recovery on Friday was driven by positive sentiment in domestic equity markets and TCS's better-than-expected Q1 earnings, but the latest opening reflects ongoing market uncertainty and geopolitical tensions. Foreign institutional investors offloaded equities worth ₹532.86 crore on a net basis on Thursday, highlighting the mixed sentiment in domestic markets despite strong benchmark performance.
Brent crude oil prices were trading higher by 0.62% at $75.83 per barrel in futures trade, showing continued volatility after recent stabilization that had driven prices above $90 per barrel. As reported by The Hindu, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 100.86, down 0.04%, providing some relief to oil-dependent economies. The spotlight remains on oil prices after renewed back-and-forth attacks between the U.S. and Iran eroded their three-week-old ceasefire. Iranian armed forces launched attacks on U.S. military infrastructure in Gulf states on Thursday following U.S. strikes on Iran's southern coastal and eastern provinces. The collapse of US-Iran ceasefire negotiations had previously driven Brent crude futures over 4% higher, breaching the $90 per barrel mark amid heightened probability of supply constraints from the Strait of Hormuz, through which about 20% of the world's oil passes. India's vulnerability to oil price volatility remains acute as the country imports approximately 85% of its crude oil requirements, making it one of the most vulnerable major economies to oil price spikes.
Economists anticipate the rupee will rise just above 94 to the dollar by end-September and then weaken to below 95 by the end of December, according to an Economic Times poll of nine economists. This outlook contrasts with earlier predictions of significant strengthening, with any move towards 93 being unlikely due to persistent dollar demand and global risks. Yes Bank chief economist Indranil Pan noted that the floor for USD/INR is firmly established at 94.00-94.50, as the dollar has shown recent appreciation bias. The rupee has depreciated 0.5% so far in fiscal 2027, partially recovering from a record low of 96.96 in late May when it was down 2.2%. Canara Bank chief economist Madhavan Kutty G expects only modest appreciation, estimating inflows of $35 billion from RBI schemes rather than the anticipated $40-70 billion. The central bank's concessional swap facility for ECBs and FCNR(B) deposits, announced in early June, aims to attract dollar inflows to support the currency.
The rupee's recent volatility comes as Indian benchmark indices surged on Friday, with the NSE Nifty 50 up 1.02% to settle at 24,206.90, demonstrating resilience in the face of continued geopolitical tensions. According to The Hindu, improved risk appetite and expectations of continued foreign portfolio inflows provided support to the rupee. The BSE Sensex climbed 827.57 points (1.08%) to close at 77,569.39, showing broad-based market strength. Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, noted that the level of 95.10 to 95.20 is an important support zone now, with a sustained move below it potentially strengthening the rupee further. The rupee had declined by 52 paise to settle at 95.48 against the US dollar on Wednesday, but the latest recovery demonstrates market confidence despite ongoing Middle East risks. The rupee's sharp decline is expected to make imports costlier, push up inflation, and could eventually affect your EMIs and daily expenses. As reported by financial experts, a ₹10 lakh foreign education loan costs ₹15,000 more when the rupee falls just 1%.
