Rupee Nears 87 Against US Dollar Amid Renewed Pressure

The Indian rupee opened 5 paise lower on February 18, continuing its downward trajectory as it edged closer to breaching the 87-mark against the US dollar in early trade. The local currency commenced trading at 86.9287 per dollar before slipping to 86.9487, compared to the previous session’s closing rate of 86.8788.

The rupee’s decline reflects a combination of domestic and global factors, including strong demand for the US dollar, fluctuations in crude oil prices, and foreign investment trends. Investors remain cautious as economic indicators and geopolitical tensions continue to influence market sentiment.

Invest in Indian Markets and Unlock Future Potential With 5paisa!

Open Account Now

US Dollar Index Gains Amid Strengthening Greenback

The US dollar index, which measures the American currency’s value against six major global currencies, saw an uptick, rising to 106.904 in early trading from its previous level of 106.575. A stronger dollar typically puts pressure on emerging market currencies, including the Indian rupee, making imports costlier and increasing inflationary risks.

Market analysts suggest that the dollar’s strength is being driven by expectations of prolonged higher interest rates in the United States. The US Federal Reserve’s monetary policy, along with economic data such as retail sales and job reports, continues to shape the greenback’s performance against other currencies.

Impact of Crude Oil Prices on the Rupee

Fluctuations in global crude oil prices remain a crucial factor influencing the Indian currency. Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, noted that Brent crude oil prices paused in early Asian trading, with prices recorded at $75.11 per barrel.

This stability comes in the wake of a drone attack on an oil pipeline pumping station in Russia, which disrupted crude oil flows from Kazakhstan. Supply chain concerns, geopolitical uncertainties, and OPEC+ production decisions continue to impact oil price movements, further affecting India’s import bill and trade deficit.

Current Brent Crude Prices and Market Reaction

According to media reports, Brent crude oil prices held steady on Tuesday after gaining in the previous session. As of now, Brent crude is trading at $75.48 per barrel, reflecting a 26-cent increase or a 0.35% rise. The market remains watchful for further developments that could impact global oil supply and demand dynamics.

Market Outlook and Future Projections

Going forward, market experts anticipate continued volatility in the currency and commodity markets. The rupee’s trajectory will depend on several key factors, including US economic data, crude oil price trends, foreign institutional investor (FII) activity, and the Reserve Bank of India’s (RBI) policy stance.

If global uncertainties persist and the dollar maintains its strength, the rupee may breach the 87-mark in the coming sessions. However, any supportive intervention from the RBI or positive domestic economic indicators could provide temporary relief to the local currency.

Traders and investors will closely monitor developments in the global financial landscape, particularly any shifts in US monetary policy, geopolitical events, and crude oil price movements, all of which will play a significant role in shaping the rupee’s near-term outlook.