Indian Rupee snaps five-day gains, opens 8 paise weak as Dollar strengthens

The domestic currency opened 8 paise slower at 86.65 against the US Dollar

Indian Rupee opened weaker against the US Dollar on Wednesday, snapping its five-day gaining streak, as the US Dollar gained amid rising geopolitical tensions.  

 

The local unit opened 8 paise weaker at 86.65 against the US Dollar after closing at 86.57 on Tueday, according to Bloomberg data. The rupee has appreciated by 1 per cent in March so far, tracking the fall in the Dollar Index. Meanwhile, during the current financial year, it witnessed a 3.65 per cent fall. 

 

The Dollar Index — a measure of the value of the US Dollar relative to a basket of foreign currencies — was up 0.10 per cent at 103.33. Safe-haven assets rose as Russian President Vladimir Putin dismissed a US proposal for a truce in Ukraine.

 

Today the opening is slightly weak as Asian currencies are generally weak and the Middle East is still rising, according to Anil Kumar Bhansali, head of treasury and executive director, Finrex Treasury Advisors LLP. The Reserve Bank of India (RBI) has announced fresh open market operations (OMO) to ease the liquidity position which is short by Rs 2.50 trillion, he said. While these moves aim to curb the liquidity concern, they could also exert downward pressure on the rupee, experts said. 

 

Indian Rupee gained on Tuesday as inflows dominated the session and FPI turned out to be buyers of equity as foreign banks sold dollar for custodian, Bhansali said. Foreign institutional investors turned net buyers injecting Rs 1,462.96 crores into Indian equities. Global funds have pulled out Rs 1.47 trillion from domestic stocks so far this year. 

 

Crude oil prices slipped after a two-day gain as global excess supply of crude oil overshadowed escalating tensions in the Middle East. Brent crude oil was down 0.26 per cent to $70.38 per barrel, while WTI crude was down 0.31 per cent at 66.69 per barrel as of 9:00 AM IST. 

 

Donald Trump’s proposed reciprocal tariffs and sector-specific trade restrictions which are set to be rolled out on April 2 could create further pressure on the rupee, according to Amit Pabari, managing director of CR Forex Advisors. "After giving a breakdown of Head-and-Shoulders pattern, the rupee has been in a strong momentum with 86.80 acting as a strong resistance, while a further breach below 86.50 could pave a path towards 86.20-86.00."