Rupee slips 10 paise to 95.28 against US dollar in early trade

The rupee weakened by 10 paise to 95.28 against the US dollar in early trade on Monday, as the American currency remained firm overseas and uncertainty around geopolitical developments kept market sentiment cautious.

The domestic currency opened at 95.25 in the interbank foreign exchange market and slipped further to 95.28, down from Friday’s close of 95.18, when it had gained 17 paise.

Forex traders said the rupee remained vulnerable despite some supportive factors such as lower crude oil prices, a softer dollar index from recent highs and renewed foreign portfolio inflows into Indian equities. According to market participants, the Reserve Bank of India is also expected to use episodes of foreign inflows to replenish foreign exchange reserves rather than allow the rupee to appreciate sharply.

Amit Pabari, managing director of CR Forex Advisors, said the rupee’s inability to strengthen meaningfully even when global cues appeared favourable suggested that the underlying sentiment remained fragile. He said that if fresh negative triggers emerge, the dollar-rupee pair could move towards the 95.80–96.00 range, while support was seen around 94.80–95.00.

Pabari noted that the dollar index had eased to around 100.90 after weaker US jobs data, a development that would ordinarily have offered some relief to the rupee. The absence of a stronger rebound in the Indian currency despite that backdrop, he said, would remain a key trend to watch this week.

The dollar index, which measures the greenback against a basket of six major currencies, was trading 0.10 per cent higher at 100.95 in early trade.

Brent crude, the global oil benchmark, was down 0.58 per cent at USD 71.70 a barrel in futures trade, offering some support to oil-importing economies such as India.

In domestic equities, benchmark indices opened higher, with the Sensex rising 281.40 points to 78,051.03 and the Nifty gaining 74.60 points to 24,347.05 in early trade. Foreign institutional investors were net buyers on Friday, purchasing equities worth Rs 1,355.33 crore, according to exchange data.

The rupee’s movement also comes against the backdrop of a decline in India’s foreign exchange reserves. Data released by the Reserve Bank of India on Friday showed that the country’s forex reserves fell by USD 5.654 billion to USD 666.933 billion in the week ended 26 June. In the previous week, reserves had risen by USD 963 million to USD 672.587 billion.

India’s reserves had touched a record high of USD 728.494 billion in the week ended 27 February, before coming under pressure in the weeks that followed as the conflict in West Asia unsettled markets and prompted intervention by the RBI through dollar sales to contain volatility in the rupee.

With PTI inputs