Noida, Aug 18 (APAC Media): The Indian rupee weakened 7 paise to 95.68 against the U.S. dollar in early trading on Tuesday, weighed down by elevated crude oil prices and persistent demand for the greenback.
The rupee opened at 95.68, compared with Monday’s close of 95.61. It had fallen 19 paise in the previous session as higher oil prices and weak market sentiment pressured the currency.
Brent crude was trading near $91 a barrel, increasing concerns over India’s import bill and demand for dollars. Oil prices have risen amid renewed uncertainty over the U.S.-Iran situation and the potential for disruptions to energy supplies through the Strait of Hormuz.
Market participants were also assessing the Reserve Bank of India’s decision to advance the closure of its concessional foreign-currency swap facility for FCNR(B) deposits. Under the revised timeline, the facility will cover deposits mobilised until Aug. 31, instead of the earlier Sept. 30 deadline.
The RBI’s swap programme has attracted more than $50 billion in deposits, strengthening India’s external liquidity position, but the change in the timeline has prompted traders to reassess the outlook for future foreign-exchange inflows.
The central bank has continued to intervene in the currency market to limit excessive volatility. Traders said state-run banks were seen selling dollars, reportedly on behalf of the RBI, as the rupee came under pressure.
The rupee is likely to remain sensitive to movements in crude oil prices, U.S. bond yields, geopolitical developments and foreign capital flows in the near term.
With Brent crude above $90 a barrel and uncertainty over global energy supplies persisting, the domestic currency could remain under pressure in the coming sessions.
–ENDS–
Disclaimer:Â This article is for informational purposes only and is based on publicly available information. APAC Media is not responsible for investment decisions or losses. Please conduct your own research or consult a financial adviser before investing.
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