Rupee Settles at 95.57 Against Dollar as RBI Intervention and Crude Correction Limit Losses

The Indian rupee pared most of its early losses to settle at 95.57 (provisional) against the US dollar on Friday, down 5 paise, finding support from suspected Reserve Bank of India (RBI) intervention and a price correction in global crude oil markets. Despite the late-session recovery, the domestic currency logged its fifth consecutive daily drop and recorded its steepest weekly decline since May 15.

At the interbank foreign exchange market, the rupee opened weak at 95.70 against the greenback and slipped further to an intraday low of 95.79 under sustained pressure from global risk aversion and elevated energy prices. However, dollar sales by state-run banks on behalf of the central bank, alongside profit booking in crude oil benchmarks, helped the currency rebound to an intraday peak of 95.51 before closing at 95.57.

Factors Driving the Currency Action

The session witnessed significant cross-currents shaping sentiment across domestic financial markets:

• RBI Market Presence: Suspected dollar-selling intervention by the central bank in currency markets prevented the rupee from breaching the psychological 95.80 threshold.
• Crude Price Correction: Brent crude futures fell 3.28% to trade around $104.10 per barrel, offering slight relief to India’s import bill after days of sharp geopolitical rallies.
• Firm Dollar Index: The US dollar index, which tracks the greenback against a basket of six major currencies, gained 0.09% to trade at 99.13, capping the domestic unit's upside.
• FII Outflows: Foreign institutional investors remained net sellers, offloading equities worth Rs 582 crore on Friday, according to exchange data.

Market Outlook and Equity Impact

Domestic benchmark equity indices also recovered from steep initial declines of nearly 1%. The BSE Sensex closed 120.83 points lower at 74,781.76, while the NSE Nifty 50 settled down 79.70 points at 23,398.10.

Dilip Parmar, Senior Research Analyst at HDFC Securities, noted that persistent geopolitical friction and uneven monsoon rainfall patterns have dampened investor sentiment, partially offsetting stability measures rolled out by the government and the RBI.

Parmar added that spot USDINR faces immediate resistance near 95.80, with technical support pegged at 95.15, paving the way for a potential consolidation phase following recent high volatility. In the absence of sustained crude cooling or a reversal in foreign capital outflows, currency analysts expect the rupee to remain under a negative bias in the near term.

Tags: Reserve Bank of India USDINR BSE Sensex Nifty 50 HDFC Securities