The Indian rupee declined on Wednesday, closing at 92.04 against the US dollar, down from the prior session’s 91.81. This weakening follows a surge in crude oil prices and heavy selling in domestic equity markets.
Geopolitical Tensions Fuel Oil Rally
Escalating conflicts in West Asia over recent weeks have spurred global risk aversion, driving up crude prices and pressuring the rupee. Brent crude settled at $99.06 per barrel, up from $98.63 the previous day.
Market observers note that state-owned banks intervened by selling dollars, likely under Reserve Bank of India (RBI) directives, to curb deeper losses.
Expert Analysis on Currency Trends
“The Indian rupee has depreciated against the US dollar, even as regional currencies show mixed results. Central bank dollar supplies have contained losses, but strong importer demand keeps dragging it lower,” stated Dilip Parmar, senior research analyst at HDFC Securities.
He added, “In the near term, spot USDINR finds immediate support at 91.60 per dollar, with key resistance at 92.40 per dollar.”
Additional Pressures from Liquidity and Flows
Tight dollar liquidity, stemming from capital outflows in equity and debt markets, adds further weight. Foreign portfolio investors (FPIs) continue offloading both stocks and bonds.
The dollar index strengthened to 99.06 from 98.63, reflecting heightened tensions as clashes between the US-Israel alliance and Iran intensify, including Israeli strikes on Iran and Iranian responses targeting related bases.
“RBI provided support, but consistent FPI selling in equities and bonds maintains pressure on the rupee,” noted a dealer at a state-owned bank.
Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP, advised, “Dollar bids will sustain rupee downside, so importers should buy on dips. Expected March 2025 inflows have stalled due to factors like the Iran conflict.”
