Rupee Rebounds from Record Low, Rises 48 Paise to 91.57 Against US Dollar Amid Equity Market Recovery
The Indian currency recovered from its record low on Thursday as improved sentiment in domestic equity markets helped the rupee rebound in early trade. However, rising crude oil prices, a stronger US dollar, and persistent foreign investor outflows continue to weigh on the local currency amid escalating geopolitical tensions in West Asia.
At the interbank foreign exchange market, the Indian Rupee opened at 92.16 against the US dollar and strengthened to a high of 91.30, before trading at 91.57, registering a gain of 48 paise from its previous close.
The recovery follows a sharp decline in the previous session when the rupee had slumped 56 paise to close at its all-time low of 92.05 per dollar. The currency had also logged a loss of 41 paise on Monday, while forex markets remained closed on Tuesday due to the Holi holiday.
Equity Market Gains Support the Rupee
Forex analysts said the rupee’s recovery was largely supported by positive momentum in domestic equity markets.
During early trade, the BSE Sensex was up 212.26 points (0.27%) at 79,328.45, while the Nifty 50 gained 86.70 points (0.35%) to 24,567.20.
Strength in equities often helps support the domestic currency by improving investor sentiment and attracting capital flows.
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Strong Dollar and Rising Oil Prices Limit Gains
Despite the early recovery, analysts warned that several macroeconomic factors continue to pressure the rupee.
The US Dollar Index, which measures the greenback against a basket of major global currencies, was trading 0.20% higher at 98.93, reflecting continued strength in the US currency.
Meanwhile, global oil prices also surged amid fears of supply disruptions.
The global benchmark Brent Crude rose 2.78% to $83.66 per barrel in futures trading, driven by concerns that the ongoing conflict in West Asia could disrupt crude shipments through the strategically important Strait of Hormuz.
West Asia Conflict Adds Pressure on Currency
Geopolitical tensions remain a key concern for financial markets.
The military conflict involving the United States, Israel, and Iran continued to escalate on Thursday.
Reports indicated that Iranian missiles struck Israeli targets after an American submarine sank an Iranian warship earlier in the week. Iran has also threatened retaliation targeting military and economic infrastructure across the region.
Such developments have heightened concerns about disruptions to global oil supply and have increased volatility across currency and commodity markets.
Higher Oil Prices Could Impact India’s Economy
Economists say the surge in crude oil prices could significantly impact India’s external balance.
India imports nearly 85% of its crude oil requirements, making the economy highly sensitive to global energy price movements. A sustained rise in oil prices can widen the country’s trade deficit, increase inflationary pressures, and weaken the rupee.
As a result, any prolonged disruption to oil supply routes in the Middle East could pose additional challenges for India’s currency and broader economy.
Foreign Investor Selling Adds to Rupee Pressure
Another factor weighing on the rupee is continued selling by foreign investors in Indian equities.
According to exchange data, Foreign Institutional Investors sold equities worth ₹8,752.65 crore on a net basis on Wednesday.
Large capital outflows from equity markets typically put pressure on the domestic currency because they increase demand for dollars.
Outlook: Rupee Likely to Remain Volatile
Market analysts expect the rupee to remain volatile in the near term as investors closely track developments in geopolitical tensions, crude oil prices, and foreign capital flows.
While the recovery in domestic equities provided short-term support to the currency, the combination of a strong dollar, rising oil prices, and continued foreign fund outflows may limit any sustained appreciation in the rupee in the coming sessions.
