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

The Indian rupee faced a slight setback on Tuesday, ending a two-session gaining streak to settle 2 paise lower at 94.60 against the US dollar. Despite positive global cues and easing crude oil prices, domestic capital outflows prevented the currency from maintaining its recent momentum.

Market Volatility and Trading Range

The rupee's performance on Tuesday showed significant intraday volatility. Opening at 94.69 against the greenback, the domestic currency fluctuated within a range of 94.48 to 94.71 before finally settling at 94.60, compared to the previous close of 94.58. This minor depreciation follows a period of rapid recovery, where the rupee had strengthened by 60 paise on Monday and 67 paise on Friday.

Geopolitical Optimism vs. Foreign Capital Outflows

Several global factors provided a cushion for the rupee, preventing a sharper decline. The de-escalation of tensions in West Asia—driven by a US-Iran peace framework agreement—has boosted investor sentiment. This agreement is expected to lead to the reopening of the Strait of Hormuz, a critical global energy shipping route.

However, these tailwinds were countered by domestic market dynamics. While the BSE Sensex rose by 544.15 points and the NSE Nifty gained 135.25 points, Foreign Institutional Investors (FIIs) remained net sellers. FIIs offloaded equities worth ₹749.18 crore during the session, a movement that capped the rupee's gains and applied downward pressure on the currency.

The Impact of Easing Crude Oil Prices

For an economy like India, which imports nearly 90% of its oil requirements, the movement in global energy markets is a primary driver of currency strength. On Tuesday, Brent crude, the global oil benchmark, traded 1.68% lower at $81.77 per barrel in futures trade.

As noted by market experts, lower crude prices act as a "favourable wind" for the rupee, reducing the demand for dollars to fund energy imports. The potential reopening of the Strait of Hormuz further stabilizes the outlook for global oil and liquefied natural gas (LNG) supplies.

Expert Outlook and Resistance Levels

Despite the minor slip, analysts remain cautiously constructive regarding the rupee's near-term trajectory. Market experts suggest the USD-INR spot price is likely to trade within a defined range.

Anuj Choudhary z Mirae Asset ShareKhan spodziewa się, że waluta będzie poruszać się w przedziale od 94,10 do 94,90. Tymczasem Dilip Parmar z HDFC Securities sugeruje tendencję spadkową w stronę poziomu 94,10, wskazując jednocześnie 95,20 jako kluczowy poziom oporu, który może ograniczyć wszelkie znaczące korekty wzrostowe.

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