INR vs USD: Rupee Manages to Climb But Gains Slip on Oil

Mumbai, April 27: The rupee gained four paise to the dollar at 94.21 on Monday as oil on the boil capped its climb and mild dollar inflows failed to encourage sharper gains seen earlier during the day. 

The currency opened slightly stronger after ending the previous session around the 94.25 level, going down as low as 94.29 and climbing as high as 94.10 before global headwinds blew in and capped the gains.  

Crude Weighs 

Rupee remains singed by the surge in oil prices which have bumped up dollar demand among importers. India is a major importer of oil which means its currency gets a beating versus the dollar whenever demand for the greenback spikes among importers vying for dollar-priced crude and hedging their dollar needs to manage higher import bills.    

The recent spike in oil prices has been driven by geopolitical tensions in the Middle East, particularly the stalled U.S.-Iran negotiations, which have heightened concerns over supply disruptions. This has kept the rupee under pressure despite intermittent support from state-run banks selling dollars and helping stabilise the currency.  

Hedging Activity 

Traders also noted that importer hedging activity has picked up pace, further limiting any meaningful appreciation in the rupee. At the same time, foreign portfolio flows remain subdued, reducing the supply of dollars in the domestic market and adding to the currency’s challenges.  

While the rupee has shown some resilience in recent sessions, analysts caution that the broader trend remains fragile. The currency has already depreciated notably in recent weeks, and expectations are that it could remain under pressure as long as crude prices stay elevated and geopolitical uncertainties persist.  

Market indicators also reflect a cautious outlook, with derivatives positioning signalling a bearish bias on the rupee in the near term. The ongoing volatility in global markets, coupled with concerns over inflation and capital flows, continues to influence currency movements.  

Close Watch 

Going ahead, traders will keep a close watch on crude oil trends, global risk sentiment and central bank actions, particularly any intervention by the Reserve Bank of India to smooth volatility. Developments around U.S. monetary policy and geopolitical negotiations are also expected to play a crucial role in shaping the rupee’s trajectory. 

In essence, while the rupee managed a modest uptick at the open, the broader narrative remains one of cautious stability rather than sustained strength, with global cues — especially oil — continuing to hold sway over the currency’s direction. 

Source:

• spot rates from https://www.moneycontrol.com/markets/currencies/