Rupee Starts The Day On A Weaker Note, Falls 20 Paise To 95.95 Against US Dollar

Mumbai: The rupee weakened by 20 paise to 95.95 against the US dollar in early trade on Monday, pressured by a stronger greenback, rising crude oil prices and continued foreign fund outflows.

Rupee Gives Up Friday’s Gains

At the interbank foreign exchange market, the Indian currency opened at 95.89 per dollar before slipping to 95.95. It had gained 24 paise on Friday to close at 95.75.

The dollar index, which measures the US currency against six major peers, rose 0.15 per cent to 101.11. A stronger dollar added to the pressure on the rupee as traders assessed the impact of the ongoing West Asia conflict.

Brent Crude Climbs Above $106

Brent crude futures advanced 2.31 per cent to $106.81 a barrel. India’s dependence on imported oil means a sustained rise in crude prices could increase demand for dollars and put pressure on the import bill.

Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, said Brent remaining above $100 posed a continuing risk to India’s import bill and foreign exchange reserves.

He expected the rupee to trade in a range of 95.50 to 96.00, with the Reserve Bank of India likely to defend the 96.00 level. His comments described a market expectation, rather than an announced RBI target.

Equities And Foreign Flows Weigh

Weakness in domestic stocks added to the cautious mood. The Sensex fell 730 points to 73,170.12 in early trade, while the Nifty declined 231.50 points to 22,908.95.

Foreign institutional investors sold Indian equities worth ₹3,693.93 crore on a net basis on Friday, according to exchange data. Such outflows can add to demand for dollars in the foreign exchange market.

Meanwhile, RBI data showed India’s foreign exchange reserves fell by $14.881 billion to $765.901 billion in the week ended September 18, largely due to a decline in foreign currency assets.