The Indian rupee rose 20 paise to 94.25 against the US dollar in opening trades on Monday, building on Thursday's close of 94.45. The currency opened at 94.36 at the interbank foreign exchange market and gained momentum to touch the 94.25 level, demonstrating continued resilience despite mixed global cues. Indian stock, currency, and commodities markets were shut on Friday due to Muharram, which may have contributed to the currency's recovery momentum. Forex traders said the rupee opened on a positive note with oil prices remaining supportive and foreign inflows improving, with the overall bias remaining positive for the rupee despite firm US dollar conditions and tepid investor risk appetite. However, the immediate hurdle remains the U.S. dollar, which continues to hold firm near a 13-month high, as noted by market analysts.
The rupee's recovery was supported by stable crude oil prices, with Brent crude trading higher by 0.72% at $72.51 per barrel in futures trade, as reported by The Hindu BusinessLine. According to CR Forex Advisors MD Amit Pabari, Brent crude has slipped to around $72 per barrel, its lowest in four months, after falling more than 10% in just one week. Pabari noted that tankers are moving freely through the Strait of Hormuz again, and Gulf supply is returning to normal, which means a lighter import bill and softer dollar demand for a country that imports most of its crude. The currency's previous recovery was driven by a severe correction in global crude oil prices, with Brent crude dropping over 4% overnight and declining over 10% this week and 21% this month, offering significant relief for oil-importing economies like India, which imports almost 90% of its crude oil requirement.
India's forex reserves increased by $963 million to $672.587 billion during the week ended June 19, according to the RBI data reported by The Hindu BusinessLine. This marked a significant turnaround from the previous reporting week when the overall reserves had dropped by $9.985 billion to $671.625 billion. According to Pabari from CR Forex Advisors, a steady gain in India's forex reserves shows the Reserve Bank is rebuilding its buffer after months of heavy dollar selling. The rupee's recovery was also supported by Reserve Bank of India (RBI) intervention after the currency came close to breaching the 95-per-dollar level during Wednesday's session, with market participants noting that RBI Governor Sanjay Malhotra's comments helped cool forward premium levels and boosted overall market sentiment.
The domestic currency may remain under pressure amid a firm US dollar and the risk of a rebound in crude oil prices, though bond inflows could offer some support, according to CR Forex Advisors MD Amit Pabari. Technically, 93.50–94.10 is a strong support zone, while a breakout above 94.80 could open the way towards 95.30–95.50, as noted by Pabari. However, the rupee's direction will continue to be driven by global oil prices, US Federal Reserve policy and geopolitical developments. The dollar index was trading at 101.37, up 0.02%, while US equity futures moved higher, as per The Hindu BusinessLine. Foreign institutional investors purchased equities worth ₹383.76 crore on a net basis on Thursday, according to exchange data, indicating continued positive sentiment in Indian markets. On the domestic equity market front, Sensex declined 63.65 points to 77,047.63 in early trade, Nifty was marginally up by 16.55 points to 24,070.20, according to Business Standard.
