Mumbai: The Indian rupee strengthened 10 paise to 96.65 against the US dollar in trading, with likely Reserve Bank of India intervention helping contain pressure on the currency, forex traders said. At the interbank foreign exchange market, the rupee opened at 96.71 before recovering to 96.65. It had settled at 96.75 against the dollar on Wednesday.Despite the improvement, the currency remained within a narrow range as strong dollar demand, expensive crude oil and sustained foreign investor selling weighed on sentiment. Dollar Demand and Reserve Decline WeighForex traders pointed to persistent macroeconomic challenges, including dollar strength and declining foreign exchange reserves. Reserves have fallen by around $50 billion over three weeks from September’s peak of $786 billion, according to the report.
The dollar index, which measures the greenback against six major currencies, edged up 0.01% to 102.25.
Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors, said corporate importer demand and safe-haven capital movements had outweighed support from the RBI’s hawkish policy stance during Wednesday’s session.He added that interventions through state-run banks helped limit further rupee losses. Traders remained watchful for RBI measures to address speculative activity in the dollar-rupee pair. Brent Crude Rises Above $102Brent crude futures climbed 2.17% to $102.37 per barrel amid concerns about supply disruptions through the Strait of Hormuz.Bhansali attributed the rebound to Middle East supply and shipping concerns, including attacks on tankers around the Gulf and the strategic shipping route.Higher oil prices added to the currency’s pressures, keeping forex market sentiment cautious despite the early recovery.Equity Weakness and FII Outflows PersistDomestic equities declined in early trade. The Sensex dropped 264.97 points to 72,408.15, while the Nifty fell 87.50 points to 22,507.65.Foreign institutional investors sold equities worth Rs 6,121.37 crore on Wednesday, according to exchange data, continuing the outflows that have weighed on the rupee.