The Indian rupee weakened by 32 paise to settle provisionally at 93.48 against the US dollar on Tuesday, weighed down by a firm American currency and fluctuating crude oil prices amid ongoing uncertainty surrounding peace negotiations in West Asia.
Despite gains in domestic equity markets, the local currency remained under strain, also reflecting the impact of the Reserve Bank of India’s recent decision to ease certain curbs on speculative trading in non-deliverable forward (NDF) markets, according to forex analysts.
On Monday, the central bank partially rolled back directives introduced on April 1 to curb excessive speculation in the rupee. Earlier, banks were required to cap their net open positions in NDF markets at USD 100 million by April 10. Under the revised guidelines, authorised dealers can resume offering INR-based non-deliverable derivative contracts to both resident and non-resident participants, subject to restrictions on related-party transactions, while the USD 100 million cap remains in place.
In the interbank foreign exchange market, the rupee opened at 93.25, slipped to an intraday low of 93.63, and eventually closed 32 paise lower at 93.48 against the greenback. On Monday, the currency had already declined by 25 paise to 93.16, following gains of 47 paise over the previous two sessions.
According to Anuj Choudhary of Mirae Asset Sharekhan, the rupee came under pressure due to uncertainty over US-Iran talks and rising crude oil prices, along with a stronger dollar. However, positive global equity trends helped limit the downside.
Also read: Asian markets surge in early trade despite Mid-East tensions
He added that traders are likely to track upcoming US economic indicators, including retail sales and ADP employment data. The USD-INR spot rate is expected to move within a range of 93.30 to 93.90 in the near term.
Meanwhile, the dollar index, which measures the US currency against a basket of six major currencies, rose 0.19 per cent to 98.09. Global oil benchmark Brent crude was trading 0.70 per cent lower at USD 94.81 per barrel in futures trade.
Market participants attributed volatility in oil prices to persistent concerns over potential supply disruptions through the Strait of Hormuz. Additionally, the ceasefire agreement between the United States and Iran is set to expire on Wednesday.
In a fresh development, Iran’s chief negotiator stated that Tehran would not engage in talks under pressure, while Donald Trump indicated he was in no hurry to conclude the conflict.
On the domestic front, equity markets ended higher, with the 30-share BSE Sensex climbing 753.03 points (0.96 per cent) to close at 79,273.33, and the Nifty 50 rising 211.75 points (0.87 per cent) to 24,576.60. Foreign Institutional Investors (FIIs) were net sellers, offloading equities worth approximately Rs 1,059.93 crore on Monday, as per exchange data.
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