Rupee Weakens 12 Paise to 94.50 Against US Dollar as Brent Crude Rises Past $110 and Equities Tumble

The Indian rupee reversed its previous session's gains to weaken by 12 paise, falling to 94.50 against the US dollar in early trade on Thursday. The depreciation was driven by surging international crude oil benchmarks and persistent selling pressure across domestic equity markets.

At the interbank foreign exchange market, the local unit opened at 94.47 before weakening to touch 94.50 against the greenback. The retreat followed a strong session on Wednesday, when the rupee climbed 53 paise to settle at 94.38 per dollar, supported by foreign inflows linked to the Jio Platforms initial public offering and market intervention by the Reserve Bank of India.

Crude Oil and Dalal Street Pressure

The primary pressure on the currency stemmed from a sharp rise in international energy costs and broad risk aversion across domestic bourses. Brent crude futures surged 1.58% to $110.54 per barrel amid escalating geopolitical tensions in the Middle East. Given that India imports over 80% of its crude oil requirements, Brent hovering above the $110 mark significantly expands the country’s import bill and widens current account pressures.

Simultaneously, Indian benchmark indices witnessed heavy selling pressure during morning trade:

• The 30-share BSE Sensex dropped 642.51 points, or nearly 0.8%, to trade at 73,067.18.
• The broader NSE Nifty50 shed 241.35 points to trade at 22,570.90.

Dollar Weakness Offers Downside Cushion

Despite the headwinds, sharper losses in the rupee were contained by lower US Treasury yields and a softer greenback. The US Dollar Index, which gauges the greenback against a basket of six major currencies, dropped 0.21% to 101.56.

Foreign exchange analysts highlighted that underlying capital flows continue to balance aggressive external pressures.

Anuj Choudhary, research analyst at Mirae Asset Sharekhan, noted that the rupee is likely to maintain a slightly positive bias despite near-term turbulence. "We expect the rupee to trade with a slight positive bias on IPO-related foreign inflows and weakness in the dollar. Softening of US treasury yields and reports that Russia is ready for new peace talks may also support the rupee," Choudhary said, adding that traders are tracking weekly US unemployment claims for further directional cues.

Outlook on Currency Volatility

Currency desks expect the Reserve Bank of India to actively monitor excessive volatility, even as higher oil prices test currency support levels.

Anindya Banerjee, head of commodity and currency research at Kotak NEO, observed that the rupee remains balanced within a broader 94.00–97.00 corridor. "The RBI has bought itself time, the Jio IPO has added near-term dollar supply, and a US trade agreement could strengthen the structural inflow story," Banerjee said. "But if portfolio selling accelerates again or crude makes a decisive move towards $120, that balance will be tested."

Tags: Reserve Bank of India BSE Sensex NSE Nifty 50 Mirae Asset Sharekhan Kotak NEO Reliance Jio Platforms