Rupee Rises to 90.73 vs US Dollar

The Indian rupee edged up by 1 paisa to 90.73 against the US dollar in early trade on Tuesday, supported by a decline in global crude oil prices. The domestic currency opened at 90.72 in the interbank foreign exchange market before slipping slightly to 90.73, compared with its previous close of 90.74. On Monday, the rupee had settled 8 paise lower, reflecting sustained pressure from external factors.

Rupee Movement And RBI Intervention

Gains in the rupee remained limited due to the strength of the US dollar and persistent Foreign Institutional Investor (FII) outflows.

Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, noted that the rupee was well offered in the previous session even though it closed lower, suggesting intervention by the Reserve Bank of India (RBI) has so far prevented the rupee from breaching the 91 mark and deterred speculative short positions.

Dollar Index And Crude Oil Impact

The dollar index, which measures the greenback’s strength against a basket of six major currencies, was trading 0.23% higher at 97.14. A stronger dollar typically weighs on emerging market currencies, including the rupee.

Meanwhile, Brent crude futures were down 0.47% at $68.33 per barrel. As India is a major crude importer, lower oil prices help ease the import bill and reduce inflationary pressures, providing short-term support to the domestic currency.

Domestic Equity Market And FII Outflows

Weakness in domestic equities also weighed on market sentiment. In early trade:

• The Sensex declined 245.87 points to 83,031.28

• The Nifty fell 106.45 points to 25,576.30

Exchange data showed that foreign institutional investors offloaded equities worth ₹972.13 crore on Monday, adding to currency pressure.

Inflation And Trade Data

Recent government data pointed to firming price pressures and a widening external imbalance in January. The latest figures highlight both domestic inflation trends and developments in the trade sector.

• Wholesale Price Inflation (WPI): Accelerated to 1.81% in January, and is following the upward trend for the third straight month.

• Key drivers: Rising prices of food items, non-food primary articles and manufactured products on a month-on-month basis.

• Exports: Inched up 0.61% year-on-year to USD 36.56 billion.

• Trade deficit: Expanded to USD 34.68 billion, the highest level in three months.

Also Read - US–India Deal Sparks ₹19,675 Cr. FPI Inflows In Early Feb

Investor Takeaway

The rupee’s move to 90.73‌ signals near‌-term stability, supported by s​ofter cru⁠de prices. However⁠, a firm dollar index, rising wholesale inflation (1.81%), a​nd c​ontinued FII outflows suggest limited up​side. The widening trade d​eficit at USD 3‌4‌.68​ billion also⁠ highlights ext​er‌nal vul⁠nerabiliti‌es. Inves‍t⁠ors should‌ monit‍or global dollar trends, oi‌l pr‍i​ces and capita​l f‌lows‍, as these facto⁠rs‌ will largely determ‌ine​ the rupee’s dir‌ection in the near t‍erm.

Sources:

Economic Times

News Drum