Rupee strengthened against the US dollar on Monday, helped by easing crude oil prices and a strong opening in the domestic stock market. The currency gained despite continued concerns over geopolitical tensions and foreign fund movements.
The rupee opened at around ₹95.82 against the US dollar and later strengthened to ₹95.72, marking a gain of 24 paise from its previous close. The currency had ended the previous session at ₹95.96.
A key factor supporting the rupee was the decline in crude oil prices. Brent crude fell towards $102 a barrel after rising sharply last week amid concerns over possible disruptions to oil supplies from West Asia.
Lower oil prices are important for India because the country imports a large share of its crude requirements. Cheaper oil reduces the pressure on India’s import bill and can also provide some relief to the rupee.
However, the currency remains sensitive to developments in the US-Iran conflict and wider West Asia tensions. Any fresh disruption to oil supplies could push crude prices higher and put renewed pressure on the rupee.
Stock market gains offer support
The rupee also benefited from a positive mood in Indian equities. The Sensex jumped more than 400 points, while the Nifty 50 moved above 23,350 in early trade on Monday.
Foreign investors provided another positive signal after returning to the Indian equity market. Foreign Institutional Investors bought shares worth around ₹599 crore on a net basis on Friday, ending a seven-session selling streak.
Continued foreign investment could support the rupee by increasing the flow of dollars into the domestic market. However, foreign investors have remained net sellers for much of September, making sustained inflows important for the currency.
IPO flows in focus
Market participants are also watching IPO-related fund flows this week. New public issues and upcoming listings could bring additional foreign capital into Indian markets.
Such inflows can temporarily increase dollar supply and support the rupee. Traders are therefore tracking equity-market activity and IPO subscriptions alongside developments in the foreign exchange market.
The US dollar index remained around the 100 level, limiting the rupee’s gains. A stronger dollar generally puts pressure on emerging-market currencies, including the Indian currency.
RBI remains important
The Reserve Bank of India is also expected to remain closely involved in managing excessive volatility in the currency market. The rupee has recently traded close to the ₹96-per-dollar level, making the central bank’s response an important factor for traders.
Dollar demand from importers, particularly oil companies, continues to provide pressure on the rupee. Exporters selling their dollar earnings, meanwhile, can provide some support when the currency weakens.
India’s foreign exchange reserves also remain under watch. RBI data showed that reserves declined by around $4.92 billion to $780.78 billion in the week ended September 11.
For now, the rupee is receiving support from softer oil prices, gains in Indian stocks and renewed foreign buying. At the same time, US-Iran tensions, crude oil prices, the US dollar, FII flows and RBI intervention remain key factors that could determine its movement in the coming sessions.
The currency’s ability to remain below the ₹96-per-dollar mark will therefore be closely watched as global markets respond to developments in West Asia and changes in investor sentiment.