Rupee Falls Further Amid Crude Surge and Narrowed Rate Gap

Mumbai, June 9 – The Indian rupee slipped by 4 paise to ₹85.72 against the US dollar in early Monday trade, weighed down by rising crude oil prices and a firm dollar, even as recent support from the Reserve Bank of India’s (RBI) rate cut lingered in the background.

In the interbank foreign exchange market, the rupee opened at ₹85.61 and moved within a tight range, hitting a high of ₹85.60 and a low of ₹85.72. It settled slightly weaker compared to Friday’s close of ₹85.68.

While the RBI’s surprise 50-basis-point rate cut on Friday initially increased investor sentiment, the aggressive move also narrowed the interest rate gap with global peers, reducing the attractiveness of Indian assets and putting downward pressure on the rupee.

Brent crude oil prices further increased the pressure as their price surged 2 per cent to USD 66 per barrel amid escalating tensions between Russia and Ukraine, raising concerns over India’s widening trade deficit. Being a major oil importer, India is particularly sensitive to rising crude costs.

The dollar index, which tracks the greenback against six major global currencies, was marginally lower at 99.02, down 0.16 percent. Brent crude futures eased slightly in later trade, hovering at USD 66.43 per barrel.

Market Outlook

Forex analysts predict the USD/INR pair will stay within a range, with resistance expected around ₹86.10–86.20 and support at ₹85.20–85.50. A break above the resistance zone could result in further rupee weakness, potentially extending to ₹86.50–86.80.

Equities and FII Flow

On the equities front, Indian markets remained upbeat. The BSE Sensex climbed 342.48 points to 82,531.47, while the NSE Nifty gained 93.30 points to settle at 25,103.20. Foreign institutional investors (FIIs) continued their positive stance, recording net inflows of ₹1,009.71 crore on Friday, according to exchange data.

What’s Ahead? 

The rupee may remain range-bound, with global crude prices and the strength of the US dollar acting as key pressure points. FII inflows and strong equities could offer some support. Investors will be watching for geopolitical developments, RBI cues, and upcoming macro data to guide near-term movement. A break above ₹86.20 could signal further weakness.

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