The rupee recouped all its losses during the day to end flat at 95.99 per dollar on Tuesday, unchanged from the previous close, after briefly breaching the 96 per dollar mark in early trade.
The recovery was aided by RBI intervention, a pullback in global crude oil prices and foreign inflows linked to equity index rebalancing, dealers said. The local currency touched an intraday low of 96.15 per dollar.
“The Indian rupee started the day under pressure, briefly cracking the 96.00 level before clawing back lost ground. Swift RBI action, a pullback in global crude, and equity index rebalancing-driven foreign inflows stepped in to restore stability. Looking ahead, the pair’s direction will remain heavily influenced by what happens with oil and broader global risk dynamics,” said Dilip Parmar, Research Analyst, HDFC Securities.
Going ahead, the rupee’s movement is likely to remain closely linked to crude oil prices and broader global risk sentiment, dealers said.
On the technical front, the rupee faces resistance at 96.30 per dollar, while 95.80 per dollar is seen as a support level.
“Initially there was good buying of the dollar due to month-end demand, but later on, as the rupee approached 96.15 per dollar, the RBI sold dollars and later there were flows from a rebalancing amounting to $500 million, thus bringing the rupee up. The move lower represents a significant weakening of the currency, with rising crude prices, a firm dollar and continued foreign portfolio outflows combining to push the rupee through the psychologically important 96 per dollar threshold,” said Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP.
The rupee has depreciated 6.37 per cent so far during the current calendar year and 5.22 per cent since the start of the Iran war. During the current month, the rupee has depreciated by 0.85 per cent.
