Mumbai: The Indian rupee closed stronger on Monday, gaining 14 paise to settle at 93.04 against the US dollar. It opened at 93.13 and moved higher during the day, touching an intraday high of 92.79 before ending slightly lower but still in positive territory. This continues the recent recovery seen in the currency after sharp movements last week.
RBI Measures Offer Support
The rise in the rupee was mainly supported by steps taken by the Reserve Bank of India to reduce volatility in the forex market. The central bank tightened rules to limit speculative trading and capped banks’ net open positions at USD 100 million. These measures helped improve confidence and stabilise the currency in the short term.
Global Factors Keep Pressure Intact
Despite the gains, the rupee continues to face pressure from global developments. A strong US dollar, elevated crude oil prices and rising geopolitical tensions are key concerns. Recent developments involving the US and Iran have added uncertainty, especially around the Strait of Hormuz, which is crucial for global oil supply.
Oil and Dollar Trends Matter
Brent crude prices remained high at around USD 107 per barrel, even though they saw a slight decline. A stronger dollar index, hovering near 99.87, also impacts the rupee negatively. Since India imports a large part of its oil, higher crude prices increase demand for dollars, putting pressure on the local currency.
Foreign Outflows and Reserves Decline
Another factor weighing on the rupee is continued foreign capital outflows. Foreign institutional investors sold equities worth nearly Rs 9,931 crore, indicating cautious sentiment among global investors. At the same time, India’s forex reserves declined by over USD 10 billion to USD 688.05 billion, reducing the buffer available to manage currency fluctuations.
Domestic Data Shows Mixed Signals
On the domestic front, economic indicators remain mixed. India’s services sector growth slowed to its weakest pace in 14 months in March, reflecting softer demand and slower business activity. This adds to concerns about near-term economic momentum.
Outlook Remains Cautious
Market experts believe the rupee may see some short-term support due to RBI’s proactive steps. However, the broader outlook remains uncertain and will largely depend on global factors such as oil prices, dollar strength and geopolitical developments.
