The Indian rupee gained slightly on Thursday, supported by intervention from the Reserve Bank of India and a dip in oil prices early in the day, market participants said. The domestic currency closed at 95.38 against the dollar, up 17 paise from the previous close, according to Bloomberg.
Currency dealers said that the central bank also intervened through its dollar sales, which helped the market. Importer demand was also largely flat, they added.
“Crude oil prices have retreated slightly and risk-on sentiment has returned, while the dollar index has softened. Along with the RBI intervention, these factors helped make the rupee the best-performing Asian currency. The market is currently being driven by news,” said Dilip Parmer, research analyst, HDFC Securities. In the near-term, the rupee is likely to trade in the range of 94.10-95.80, he added.
Geopolitical Headwinds
US President Donald Trump said Iran had called him and they “badly” want to make a deal. Following the remarks, oil prices dipped to $ 76.75 per barrel during the day compared to $ 78 levels a day earlier. However, the strikes between the two countries continue.
The rupee was Asia’s best performer on Thursday, followed by Chinese renminbi rising 0.16% and the Japanese yen at 0.14%.
Year-to-Date Depreciation
So far in the calendar year, the rupee depreciated 6.13%. Over the last year, the rupee declined 10%.
“The sentiment is still weak for the rupee, so any negative news could push it lower. Persistent geopolitical tensions that threaten oil‑dependent economies, rising crude prices, and a firm dollar index near 100 could all weigh on the rupee going forward,” said Amit Pabari, managing director, CR Forex. If the situation persists, the rupee can move towards 96-96.20 levels again, he added.