Rupee Drops 19 Paise to 95.61, Forex Reserves Cross $707 Billion

The Indian rupee depreciated 19 paise to close at 95.61 (provisional) against the US dollar on Monday, weighed down by weak domestic equity markets and a sharp rise in crude oil prices. Forex traders said the USD/INR pair could remain under pressure in the near term amid geopolitical uncertainty and broad dollar support.

At the interbank foreign exchange market, the rupee opened at 95.50 against the US dollar and moved between 95.49 and 95.62 during the session before settling at 95.61. The domestic currency had gained 3 paise on Friday to close at 95.42.

Analysts said the rupee’s downside was partly cushioned by a softer US dollar. “We expect the rupee to trade with a slight negative bias on delay in the deal between the US and Iran and rising crude oil prices,” said Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan.

The dollar index declined 0.26% to 99.40, while Brent crude, the global oil benchmark, rose 0.99% to USD 89.40 a barrel in futures trade. Higher crude prices typically increase India’s import bill and put additional pressure on the rupee.

Investor sentiment was also affected by the Reserve Bank of India’s recent decision to limit its concessional swap facility for FCNR(B) deposits to deposits mobilised until August 31. The earlier cut-off date was September 30. The facility was introduced to encourage foreign currency inflows and has attracted USD 56.84 billion through August 13.

Domestic equities also weakened, with the Sensex falling 281.09 points to 77,728.16 and the Nifty declining 78.35 points to 24,287.65. Foreign institutional investors, however, remained net buyers, purchasing equities worth Rs 508.12 crore on Friday.

Meanwhile, India’s forex reserves surged USD 14.136 billion to USD 707.002 billion in the week ended August 7, providing a significant external buffer amid currency volatility. In the previous week, reserves had risen by USD 10.512 billion to USD 692.866 billion.