Rupee Treads Cautiously as Global Oil Prices Surge Amid West Asia Hostilities
The Indian Rupee settled slightly weaker against the US dollar on Thursday, closing at 96.57 (provisional). This minor depreciation came despite intense geopolitical tensions in West Asia, which continue to keep global crude oil prices elevated. Forex traders note that a likely intervention by the Reserve Bank of India (RBI) provided significant support to the local currency unit throughout the day.Rupee Movement and Global Crude Surge
The rupee depreciated 4 paise from its previous close. On Thursday, the currency traded within a narrow range of 96.45-96.59 in the interbank foreign exchange market, eventually settling at 96.57. This marks a slight movement compared to Wednesday's close of 96.53, where the rupee depreciated by 28 paise against the US dollar.The primary driver for currency movement remains the escalating conflict in West Asia. Brent crude, the global oil benchmark, was trading 2.21 per cent higher at $96.15 per barrel in futures trade. Forex traders attribute the elevated crude prices to deep concerns over the security of oil shipments passing through the Red Sea and the Strait of Hormuz.
Expert View on Geopolitical Risk and Intervention
Anuj Choudhary, Research Analyst at Mirae Asset ShareKhan, observed that the rupee traded with a negative bias due to weak domestic markets coupled with the surge in crude oil prices. This surge is linked directly to the ongoing hostilities between the US and Iran, noting the sustained attacks on US facilities by Iran while the US targeted Iranian interests.However, Choudhary added that diplomatic talks between the two nations could prevent a more severe fall in the rupee. He projected that the USD-INR spot price is expected to trade within the range of Rs 96.30 to Rs 96.85. V K Vijayakumar, Chief Investment Strategist at Geojit Investments Ltd, similarly pointed to this conflict as a negative factor impacting the currency. He specifically cited the attacks on Saudi oil tankers by the Houthis as contributing to the sharp spike in Brent crude.
Domestic Market and Dollar Index Performance
The dollar index, which measures the greenback's strength against a basket of six currencies, was reported trading flat at 101.12.On the domestic equity front, both major indices registered losses on Thursday. The Sensex declined by 363.66 points to settle at 76,391.39. Meanwhile, the Nifty fell 126.65 points to close at 23,869.60.
Foreign Institutional Investors (FIIs) offloaded equities worth Rs 819.20 crore on a net basis on Wednesday, according to exchange data.
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