Rupee Ends Lower at 95.96 Against Dollar, Brent Crude Rises 2.74%

The rupee declined 23 paise to 95.96 (provisional) against the US dollar on Thursday, weighed down by a sharp rise in crude oil prices, a stronger greenback and heightened geopolitical uncertainty.

At the interbank foreign exchange market, the rupee opened at 95.84 and touched an intraday low of 95.98 against the US dollar before settling at 95.96. The domestic currency had closed at 95.73 on Wednesday, after gaining 16 paise a day earlier.

Forex traders said the rupee came under pressure as Brent crude prices climbed above USD 100 per barrel, raising concerns over India's import bill and current account position. Heavy selling in domestic equities also encouraged risk aversion and strengthened demand for the US dollar.

Brent crude futures, the global oil benchmark, were trading 2.74 per cent higher at USD 105.90 per barrel. Oil prices have risen sharply from around USD 72 a barrel in late February, amid continuing uncertainty over the Iran conflict and stalled diplomatic efforts in West Asia.

Aamir Makda, Commodity and Currency Analyst at Commodity Technical Research, Choice Broking, said the rupee's recent weakness had intensified amid surging Brent prices and a robust US dollar.

He said resilient US purchasing managers' index data had revived inflation concerns, while weak demand at a five-year US Treasury auction pushed bond yields higher. The 10-year US yield rose more than 15 basis points from Tuesday's close, while the five-year yield crossed 5 per cent for the first time since 2007.

Makda said 96.00 remains an immediate resistance level for the rupee, while 95.43 could provide downside support. The dollar index, which measures the greenback against six major currencies, was up 0.18 per cent at 100.99.

Domestic equities also weakened sharply. The Sensex plunged 1,247.71 points, or 1.67 per cent, to 73,580.54, while the Nifty fell 383.70 points, or 1.64 per cent, to 23,063.10.

Despite the market volatility, foreign institutional investors were net buyers of Indian equities worth Rs 1,617.45 crore on Wednesday, exchange data showed.