Rupee slides 19 paise to 95.61 vs US dollar as crude oil, equities weigh
The Indian rupee depreciated by 19 paise against the U.S. dollar on Monday, closing at 95.61 (provisional), as domestic equity markets weakened and crude oil prices surged. The currency settled lower after trading in a narrow band during the session, reflecting persistent concerns over global oil supply and cautious investor sentiment.
At the interbank foreign exchange market, the rupee opened at 95.50 against the greenback and moved between 95.49 and 95.62 before ending at 95.61. In the previous session on Friday, the rupee had appreciated by 3 paise to close at 95.42, supported by a softer dollar and positive equity cues.
Forex traders attributed the fall to a mix of domestic and global factors. The delay in a potential deal between the United States and Iran, which could have eased oil supply concerns, kept crude prices elevated. Additionally, the Reserve Bank of India's decision on August 14 to restrict its swap facility for Foreign Currency Non-Resident (Bank) deposits, or FCNR (B), to deposits mobilised until August 31, prompted some caution among investors. The earlier cut-off date had been September 30.
The FCNR (B) scheme allows banks to accept foreign currency deposits from non-resident Indians, offering attractive interest rates. The RBI's concessional swap facility, introduced to encourage foreign currency inflows, has attracted $56.84 billion until August 13, according to the central bank. The revised date aims to streamline the facility, but it may also influence near-term capital flows.
Meanwhile, the dollar index, which measures the greenback's strength against a basket of six major currencies, was trading 0.26% lower at 99.40. A softer dollar typically provides some relief to emerging-market currencies, but the impact was limited on Monday. Brent crude, the global oil benchmark, rose 0.99% to $89.40 per barrel in futures trade, adding pressure on India's import bill and the rupee.
Domestic equity markets also ended lower, dampening risk appetite. The Sensex dropped 281.09 points to settle at 77,728.16, while the Nifty closed down 78.35 points at 24,287.65. The bearish trend in equities often leads to foreign outflows, further pressuring the rupee.
According to exchange data, foreign institutional investors had purchased equities worth ₹508.12 crore on a net basis on Friday. This followed a period of volatile flows, and market participants will monitor subsequent FII activity for cues on the rupee's direction.
On the macro front, India's foreign exchange reserves jumped by $14.136 billion to $707.002 billion during the week ended August 7, the RBI said on Friday. The previous reporting week had seen reserves rise by $10.512 billion to $692.866 billion. Strong reserves provide a cushion against external shocks and help stabilise the currency.
Analysts expect the rupee to trade with a slight negative bias in the near term, pressured by rising crude oil prices, global uncertainties, and the evolving FCNR (B) swap norms. However, a soft dollar and robust reserves could limit the downside. The currency's movement will largely depend on international oil price trends and the trajectory of capital flows.
