Rupee Ends Two-Day Rally to Settle Lower at 94.60 Against US Dollar

The Indian rupee faced a slight setback on Tuesday, breaking a recent winning streak to close 2 paise lower at 94.60 against the US dollar. Despite positive global developments and cooling energy prices, domestic market pressures prevented the currency from maintaining its upward momentum.

Market Volatility and the Impact of Capital Outflows

After a strong recovery over the previous two sessions—gaining 67 paise on Friday and 60 paise on Monday—the rupee saw a minor correction. In the interbank foreign exchange market, the currency opened at 94.69 and fluctuated within a range of 94.48 to 94.71 before settling at 94.60.

The primary headwind for the rupee was the continued outflow of foreign capital from Indian equity markets. Although domestic benchmarks showed strength, with the BSE Sensex rising 544.15 points to close at 76,808.48 and the NSE Nifty gaining 135.25 points to end at 23,989.15, Foreign Institutional Investors (FIIs) remained net sellers. Exchange data revealed that FIIs offloaded equities worth ₹749.18 crore during the session, placing downward pressure on the domestic currency.

Geopolitical De-escalation and the Crude Oil Factor

On a positive note, global geopolitical tensions have eased, providing a supportive backdrop for the rupee. Optimism surrounding a US-Iran peace framework agreement has influenced both commodity and currency markets. This agreement is expected to lead to the reopening of the Strait of Hormuz, a critical global energy artery for oil and liquefied natural gas exports.

The shift in geopolitical sentiment has also benefited the energy outlook. Brent crude, the global oil benchmark, traded 1.68% lower at $81.77 per barrel. For an economy like India, which imports nearly 90% of its oil requirements, lower crude prices act as a significant stabilizer for the rupee by reducing the import bill and easing the current account deficit.

Expert Outlook: Expected Trading Ranges

Despite the slight dip, market analysts remain largely constructive regarding the rupee's near-term trajectory. The consensus suggests that while the currency may face intermittent resistance, the overall trend remains biased toward stability or slight strengthening.

Anuj Choudhary, analis riset di Mirae Asset ShareKhan, memperkirakan harga spot USD-INR akan diperdagangkan dalam rentang 94,10 hingga 94,90. Senada dengan itu, Dilip Parmar dari HDFC Securities mengantisipasi adanya bias penurunan, yang menunjukkan bahwa level spot mungkin akan bergerak menuju 94,10. Namun, ia memperingatkan bahwa 95,20 diperkirakan akan bertindak sebagai level resistansi jangka pendek, yang membatasi lonjakan korektif yang tiba-tiba.

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