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

The Indian rupee faced a minor setback on Tuesday, ending a two-session winning streak to settle 2 paise lower at 94.60 against the US dollar. Despite positive global developments in energy markets and West Asian geopolitics, domestic capital outflows prevented the currency from sustaining its momentum.

Global Tensions Ease, but Domestic Outflows Cap Gains

The rupee's performance on Tuesday was a tug-of-war between favorable international signals and domestic market pressures. 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.

While the de-escalation of tensions in West Asia and the anticipated reopening of the Strait of Hormuz provided a support floor for the currency, the primary headwind came from the equity markets. Foreign Institutional Investors (FIIs) remained net sellers, offloading equities worth ₹749.18 crore during the session. This exodus of foreign capital exerted downward pressure on the rupee, offsetting the gains seen in previous sessions.

Lower Crude Oil Prices Provide a Tailwind

A significant factor providing relief to the Indian economy remains the cooling of global energy prices. Brent crude, the global oil benchmark, saw a decline of 1.68 per cent, trading at $81.77 per barrel in futures trade.

For an economy like India, which imports nearly 90 per cent of its crude oil requirements, lower prices are a critical driver for currency stability. The dip in oil prices is largely attributed to the US-Iran peace framework agreement. This diplomatic breakthrough, which will be formally signed in Switzerland this Friday with Vice President JD Vance leading the American delegation, is expected to stabilize global energy shipping routes.

Analyst Outlook: Range-Bound Movement Ahead

Despite the slight dip, market experts maintain a constructive view of the rupee's near-term trajectory. Analysts suggest that the USD-INR pair is likely to remain within a specific corridor as markets digest the new geopolitical reality.

Anuj Choudhary, analista di ricerca presso Mirae Asset ShareKhan, prevede che il prezzo spot USD-INR oscillerà in un intervallo compreso tra 94,10 e 94,90. Approfondendo ulteriormente questa prospettiva, Dilip Parmar di HDFC Securities ha osservato che la valuta potrebbe mantenere un orientamento al ribasso, con i livelli spot che gravitano verso la soglia di 94,10. Tuttavia, ha avvertito che 95,20 potrebbe fungere da forte livello di resistenza, limitando eventuali movimenti correttivi significativi verso un indebolimento della rupia.

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