INR vs USD: Rupee Rebounds As Oil Cools, Rises 16 Paise Against Dollar

Mumbai, May 6:The rupee saw a relief rally on Wednesday, rebounding and tracking a pullback in crude oil prices and improved global risk sentiment, even as underlying pressures on the currency remained.

The currency rose 24 paise at the open to 95.04 against the dollar.It touched a high of 94.96 as easing oil prices offered much-needed relief and went as low as 95.19 during trade. At the time of writing, rupee was up 16 paise at 95.13, paring gains after strong opening.

Rupee Firms

The rebound comes after a sharp slide in the previous session, when the rupee had hit record lows amid a surge in crude prices and heightened geopolitical tensions. Elevated oil prices have been a key headwind for the currency, given India’s heavy dependence on imports, which increases dollar demand and widens the current account deficit.

A key driver of the rupee’s recovery is the cooling in crude oil prices, following signs of de-escalation in the Middle East and growing expectations of a possible U.S.-Iran peace deal. Lower oil prices typically ease pressure on the rupee by reducing import costs and improving inflation expectations.

Global Cues

Global cues have also turned supportive. Asian currencies rallied alongside a broader improvement in risk appetite, helping the rupee recover from its recent lows. The currency had slipped to record lows earlier this week butstabilised as oil retreated and sentiment improved.

Traders also point to expectations of policy support as an additional factor aiding the rupee. Authorities are exploring measures to boost dollar inflows and stabilise the currency, including steps to attract foreign capital and manage liquidity in the forex market.

Caution Remains

Despite the rebound, the broader outlook remains cautious. The rupee continues to hover near historically weak levels after breaching the 95 per dollar mark, andremainshighly sensitive to movements in crude oil and geopolitical developments.

The recent volatility underscores how closely the rupee is tracking oil prices.Earlier, a spike in crude to above $110 per barrel had triggered a sharp depreciation, while the latest pullback has offered only partial relief.

Going ahead, the direction of the rupee is likely to hinge on two key factors—oil price trends and progress on geopolitical negotiations. A sustained decline in crude could support further recovery, while any renewed escalation in tensions could quickly reverse gains.

For now, the rupee’s rebound suggests a tentative return of stability—but one that remains fragile and heavily dependent on external cues.

Source:

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