Rupee Depreciates 21 Paise to 94.97 Against US Dollar in Early Trade Amid Strong Greenback

The Indian rupee weakened by 21 paise to trade at 94.97 against the US dollar in early interbank trade, weighed down primarily by persistent strength in the greenback across global currency markets.

At the interbank foreign exchange market, the local unit opened at 94.90 against the American currency before touching an intraday low of 94.97, recording a drop of 21 paise from its previous closing level of 94.76 recorded on Friday. Forex traders noted that while the broad overseas momentum of the dollar applied downward pressure on the local currency, a firm opening in domestic equities and a sharp pullback in international crude oil prices helped cushion deeper losses.

Global Cues and Oil Dynamics

The dollar index, which tracks the greenback’s performance against a basket of six major global currencies, stood higher by 0.07% at 101.94. In commodities, international benchmark Brent crude futures dropped 3.07% to $109.95 per barrel. Because India imports more than 80% of its crude oil requirements, easing energy prices typically mitigate domestic trade deficit pressures and offer crucial respite to the rupee's external balance.

Anindya Banerjee, Head of Commodity and Currency Research at Kotak NEO, noted that the currency pair is navigating defined technical ranges.

"USDINR is likely to trade within 94.40–95.60 after ending October near 94.95," Banerjee stated, adding that softer crude prices provide relief to the rupee, whereas any renewed oil price spikes could push the exchange rate toward the upper end of that corridor. He emphasized that ongoing market operations by the Reserve Bank of India (RBI) have played an instrumental role in containing excessive exchange rate volatility.

Macro Indicators and Equity Market Reaction

Key Market and Economic Indicators:

• Foreign Exchange Reserves: According to the latest statistical supplement from the RBI, India's foreign exchange reserves declined by $1.269 billion to $719.748 billion during the week ended October 30.
• Foreign Institutional Activity: Foreign Institutional Investors (FIIs) turned net buyers in the domestic cash segment, purchasing shares worth ₹3,598.54 crore on a net basis on Friday.
• Domestic Equities: The BSE Sensex jumped 764.72 points to 75,216.80 in early trade, while the NSE Nifty rallied 201.40 points to trade at 23,255.90.

Despite the depreciation of the rupee, the sharp gains across domestic benchmark indices and sustained foreign institutional buying indicate that underlying risk sentiment remains resilient. Market participants will continue monitoring global dollar movements, US Treasury yields, and potential RBI liquidity interventions in the spot and forward foreign exchange markets to gauge near-term direction.