Rupee opens stronger at 85.15/$ as oil falls; focus on India-Pak tensions

The Indian rupee opened stronger on Wednesday, supported by lower oil prices and steady foreign inflows into equities, despite lingering India-Pakistan border tensions.

 

The domestic currency opened 10 paise higher at 85.15 after ending at 85.25 against the greenback on Tuesday. The rupee on Monday appreciated to as much as 84.96 during Monday's trade to close at its highest closing since December 20, 2024.

 

The decline in the rupee on Tuesday was driven by renewed geopolitical tensions and increased demand for the US dollar, which together exerted pressure on the local unit, according to Amit Pabari, managing director at CR Forex Advisors.  All attention will be on the Cabinet Committee on Security (CCS) meeting, which is scheduled to be held around 11 AM. This follows Prime Minister Narendra Modi granting armed forces "complete operational freedom" to determine the mode, targets, and timing of India's response to the April 22 Pahalgam terror attack.

 

 

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However, amid the fog of regional tension, positive undercurrents have begun to surface, Pabari noted. Foreign Institutional Investors (FIIs), lured by India’s attractive real yields and strong corporate earnings, have emerged as net buyers, he said. FIIs bought stocks worth ₹2,385.61 on Tuesday, taking the 10-day purchase to ₹37,359 crore.

 

US President Donald Trump on Tuesday said that trade talks with India are progressing well and the two countries are expected to reach a deal soon, according to reports. Meanwhile, US Treasury Secretary Scott Bessent hinted that India could become the first country to sign a trade deal with the United States, adding optimism to the currency. 

 

The dollar index — a measure of the value of the US dollar relative to a basket of foreign currencies — was up 0.05 per cent at 99.28, as of 9:10 AM IST. The index is, however, poised for its weakest monthly performance since November 2022.  

 

Rupee is set to open slightly stronger at 86.22 and should remain volatile as reports on the border arrive, according to Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP. "The range is wide at 84.90 to 85.60 with upticks to the pair getting sold off before tomorrow's holiday."

 

Crude oil prices slipped as President Trump's trade policies raised concerns of a weakening global growth and lower fuel demand. Brent crude oil was down 0.87 per cent to $63.69 per barrel, while WTI crude was down 0.99 per cent at 59.82 per barrel as of 9:15 AM IST.