Mumbai: The Indian rupee strengthened marginally against the US dollar in early trade on Monday, gaining 4 paise to 94.39 as strong FCNR-related dollar inflows supported the domestic currency. However, elevated crude oil prices limited further gains.
At the interbank foreign exchange market, the rupee opened at 94.40 against the US dollar before strengthening to 94.39, up 4 paise from its previous close.
On Friday, the domestic currency had settled 8 paise higher at 94.43 against the greenback.
FCNR Inflows Support Rupee
Strong FCNR-related dollar inflows have provided support to the rupee despite persistent global headwinds.
CR Forex Advisors MD Amit Pabari said 94.00-94.20 remains a key support zone for the rupee. However, intensifying global headwinds could push the USD-INR pair towards 95.00, followed by 95.50 and 96.00.
India's foreign exchange reserves also climbed to a fresh record high. According to the Reserve Bank of India, forex reserves jumped by $11.475 billion to $740.803 billion during the week ended August 28.
Crude Oil Nears $97
Higher crude oil prices remained a major risk for the Indian currency as escalating US-Iran tensions raised concerns about potential disruptions to oil supplies through the Strait of Hormuz.
Brent crude futures rose 0.80% to $97.05 per barrel.
Higher crude prices can increase India's import bill and dollar demand, potentially putting fresh pressure on the rupee.
Meanwhile, the dollar index edged 0.01% higher to 99.18 amid safe-haven demand.
Sensex, Nifty Trade Lower
Domestic equities also started weak. The Sensex fell 172.77 points to 76,342.66, while the Nifty declined 63.30 points to 23,832.60.
Foreign institutional investors sold Indian equities worth a net Rs 3,111.94 crore on Friday, according to exchange data.
