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

The Indian rupee faced a minor setback on Tuesday, closing 2 paise lower at 94.60 against the US dollar and snapping a consecutive two-day winning streak. Despite favorable global developments in energy markets, domestic capital outflows exerted downward pressure on the domestic currency.

Market Volatility and Trading Range

After seeing significant recoveries on Friday and Monday—gaining 67 paise and 60 paise respectively—the rupee struggled to maintain momentum during Tuesday's session. In the interbank foreign exchange market, the currency opened at 94.69 against the greenback. Throughout the day, it fluctuated within a range of 94.48 to 94.71 before eventually settling at 94.60, compared to its previous close of 94.58.

While the dollar index, which tracks the US currency against a basket of six major currencies, was marginally lower at 99.61, the rupee could not capitalize on this weakness due to specific domestic headwinds.

Geopolitical Optimism vs. Capital Outflows

The forex market received several positive signals from the global stage. Tensions in West Asia have shown signs of de-escalation following a US-Iran peace framework agreement. This development is expected to lead to the reopening of the Strait of Hormuz, a critical global energy shipping route.

Furthermore, Brent crude, the global oil benchmark, saw a decline of 1.68 per cent, trading at $81.77 per barrel. For an economy like India, which imports nearly 90 per cent of its oil requirements, lower crude prices act as a significant tailwind for the rupee. However, these gains were largely offset by the behavior of foreign institutional investors (FIIs). Although domestic equity benchmarks like the BSE Sensex and NSE Nifty ended higher, FIIs remained net sellers, offloading equities worth Rs 749.18 crore during the session.

Expert Outlook and Predicted Ranges

Despite the minor dip, market analysts remain constructive regarding the rupee's near-term trajectory. Most experts believe the currency will continue to face intermittent resistance but maintain a general downward bias against the dollar.

Anuj Choudhary, onderzoeksanalist bij Mirae Asset ShareKhan, verwacht dat de USD-INR spotprijs zal handelen binnen een bandbreedte van 94,10 tot 94,90. Door meer specifieke technische niveaus toe te voegen, merkte Dilip Parmar van HDFC Securities op dat de spotniveaus op korte termijn waarschijnlijk naar 94,10 zullen neigen, terwijl 95,20 naar verwachting als een belangrijk weerstandsniveau zal fungeren, wat eventuele opwaartse correctieve bewegingen zal beperken.

Belangrijkste conclusies