Traders said the rupee
is likely to face continued pressure in the near term due to geopolitical developments, although softer crude oil prices may offer some cushion. Brent crude was trading marginally lower at $60.70 per barrel in futures trade.
The US carried out a military operation in Venezuela over the weekend, resulting in the capture of President Nicolás Maduro. US President Donald Trump indicated that the country’s oil reserves could be tapped for international sale, stoking market uncertainty.Meanwhile, the dollar index, which measures the US currency against a basket of six major currencies, rose 0.36% to 98.50. Asian peers of the rupee were mostly weaker, providing limited support.
On the domestic front, the equity market opened lower, with the Sensex down 135.81 points at 85,626.20 and the Nifty declining 25.75 points to 26,302.80.Foreign institutional investors were net buyers on Friday (January 2), acquiring equities worth ₹289.80 crore.
RBI intervention remains a key factor for the rupee, following a challenging week marked by strong dollar demand and thin supply. Latest Reserve Bank of India data showed the country’s forex reserves increased by $3.293 billion to $696.61 billion in the week to December 26.
The 1-month non-deliverable forward suggested a marginally higher-to-flat opening for the rupee. Analysts noted that corporate dollar demand remained heavy while hedging by exporters was limited, keeping pressure on the local currency.
The rupee has now erased nearly half of the rally it had seen from intervention earlier, moving from 91 to around 89.25. Market participants said the currency may remain under strain until progress is seen on a potential US-India trade agreement.
Investors will also be tracking key US macroeconomic data this week, which could influence Federal Reserve policy and further impact currency movements.
–With agencies inputs
