Rupee Edges Up 3 Paise to 95.12 Against US Dollar as RBI Intervention Offsets High Oil Prices
The Indian rupee halted its three-session losing streak on Tuesday, settling marginally higher by 3 paise at 95.12 (provisional) against the US dollar. The modest recovery was largely supported by suspected market intervention by the Reserve Bank of India (RBI), which helped offset headwinds stemming from elevated global crude oil prices and continued capital outflows by foreign institutional investors.
In the interbank foreign exchange market, the local unit opened at 95.17 and moved within a narrow band of 95.09 to 95.24 before ending the session at 95.12. On Monday, the currency had tumbled 22 paise to close at 95.15, having surrendered a cumulative 77 paise over the preceding three sessions.
Key Drivers Behind Currency Movements
Currency strategists noted that while central bank liquidity operations stemmed sharper intraday declines, broader macroeconomic pressures limited any meaningful appreciation.
Key market catalysts during the session included:
- Central Bank Presence: Timely dollar-selling interventions by the Reserve Bank of India prevented the local currency from sliding past the 95.25 resistance mark.
- Firm Crude Prices: Persistently elevated energy costs continued to stoke concerns regarding India's trade deficit and imported inflation.
- Foreign Fund Selling: Sustained offloading of equities by foreign portfolio investors kept the rupee under persistent pressure.
- Pre-Fed Caution: Investors remained reluctant to take aggressive positions ahead of the imminent policy decision and forward guidance from the US Federal Reserve.
According to Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, the rupee traded with minor gains on likely intervention by the RBI, though the rebound in crude oil prices, muted domestic equity momentum, and an underlying firm tone in the greenback capped sharper upside moves.
Broader Market Context
Domestic equity benchmarks finished Tuesday's volatile trading session virtually unchanged, tracking weak sentiment across heavyweight banking stocks and regional uncertainty. The 30-share BSE Sensex ended 8.08 points lower at 73,598.67, having moved between an intraday high of 73,762.98 and a low of 73,179.41.
Market participants expect the rupee to remain in a consolidated range in the near term, with direction heavily dependent on the Federal Reserve's interest rate trajectory, geopolitical developments impacting oil supply chains, and FII trading flows in Indian equities.
