Rupee Struggles Against Dollar as Geopolitical Fire Ignites Market Volatility
Currency Dynamics and Foreign Exchange Movement
The rupee appreciated slightly by 7 paise to close at 95.41 (provisional) against the US dollar on Thursday. This movement occurred despite pressure from a strengthening greenback and firming crude oil prices globally. The currency traded in a range between 95.58 and 95.28 during the day, having opened lower by 4 paise at 95.52.The rupee had seen a decline of 52 paise to close at 95.48 against the dollar on Wednesday. Analysts suggest that suspected intervention by the RBI provided necessary support to the local currency. This was compounded by dollar selling observed from state-run lenders in the market.
Analyst View on Dollar Support and Regional Tensions
Finrex Treasury Advisors LLP noted that while the rupee rebounded after facing pressure on the previous day, persistent Middle East tensions remain a major downside factor. Anil Kumar Bhansali, Head of Treasury at Finrex, stated that military action involving the US and Iran continues to keep concerns alive regarding the security of the Strait of Hormuz.The appreciation was attributed partly to state-owned banks selling dollars, which is widely believed to be done on behalf of the RBI. However, external pressures from regional tensions continue to weigh heavily on the currency's performance.
Global Commodity and Dollar Index Readings
Brent crude futures were trading at $78.40 per barrel, showing a rise of 0.46 per cent. In related global developments, the US launched new airstrikes against Iran on Thursday. Tehran responded by targeting Gulf countries in an exchange that threatens an interim deal designed to help end the war in West Asia.The dollar index, which measures the greenback's strength against a basket of six currencies, was recorded at 100.77, marking a rise of 0.01 per cent. These commodity and geopolitical developments added volatility to global markets.
Equity Markets Surge Amid Recovery Rally
On the domestic equity front, the stock markets showed significant recovery. The Sensex rebounded by 238.22 points, settling at 76,741.82. Similarly, Nifty gained 80.75 points, closing at 23,962.80 on Thursday.Foreign institutional investors contributed to the stability of the market over the preceding two days. According to exchange data, foreign institutions purchased equities worth Rs 1,962.80 crore on a net basis on Wednesday.
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