Rupee strengthens in early trade as oil prices ease, RBI support boosts sentiment

The Indian rupee advanced against the US dollar in early trading on Friday, supported by easing crude oil prices, tentative signs of geopolitical relief and renewed confidence in intervention measures by the Reserve Bank of India (RBI).

The currency rose by 18 paise to trade at 96.18 against the dollar after opening at 96.30 in the interbank foreign exchange market. The recovery followed Thursday’s rebound, when the rupee gained 50 paise from its record closing low to end at 96.36.

Currency traders said markets drew reassurance from comments made by US secretary of state Marco Rubio, who suggested that diplomatic discussions concerning Iran were progressing positively. Although Rubio cautioned against excessive optimism, his remarks helped temper investor concerns over escalating tensions in the region.

The easing in geopolitical anxiety contributed to a moderation in crude oil prices, with Brent crude hovering near the USD 104 per barrel level. Lower oil prices generally reduce pressure on India’s import bill and support the rupee.

Market participants also pointed to growing confidence around the RBI’s planned USD 5 billion buy-sell swap auction scheduled for 26 May.

Analysts believe the move could inject additional rupee liquidity into the banking system and help the central bank manage currency volatility more effectively.

Amit Pabari, managing director of CR Forex Advisors, said the proposed swap operation had strengthened market confidence in the RBI’s readiness to intervene if global conditions worsen.

He added that supportive measures from the central bank, along with positive global developments, could help the rupee stabilise further. However, persistent geopolitical tensions remain a major risk factor for the currency.

Meanwhile, the dollar index, which measures the strength of the US currency against a basket of six major currencies, was marginally lower at 99.24.

In the commodities market, Brent crude futures were trading 1.59 per cent higher at USD 104.21 per barrel.

Indian equity markets also opened higher, with the Sensex rising 332.39 points to 75,507.09 and the Nifty gaining 84.60 points to reach 23,747.40 in early trade.

Despite the positive start to the day, foreign institutional investors continued to remain cautious, selling equities worth Rs 1,891.21 crore on a net basis on Thursday, according to exchange data.

Separately, commerce and industry minister Piyush Goyal said the government was examining measures to address the widening current account deficit amid ongoing pressure on the rupee and a growing trade imbalance.

With IANS inputs