Rupee Opens 14 Paise Higher Against U.S. Dollar As Lower Crude Price Supports Sentiment

The Indian rupee opened stronger against the U.S. dollar on Tuesday, July 28, gaining 14 paise in early trade as easing crude price levels and recent intervention by the Reserve Bank of India (RBI) helped support the domestic currency.

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The rupee opened at 95.75 against the U.S. dollar, compared with its previous close of 95.89.
The opening strength came even as the U.S. dollar remained firm in global markets. Softer oil prices reduced pressure on India’s import bill, offering support to the rupee despite broader gains in the greenback.

Lower Crude Price And RBI Action Support Rupee

According to Finrex, the rupee was expected to open around 95.85 per U.S. dollar, aided by a sharp decline in Brent crude price to $87.10 a barrel from nearly $100 reached last week. The fall was preceded by a period of tense peace in the U.S.-Iran relationship, reducing fears of possible supply disruptions in international energy markets.

Finrex also added that RBI's recent interventions have ensured the stability of the rupee despite changes in the foreign exchange markets. The combination of central bank support and lower crude price levels reduced pressure on the domestic currency at the start of the session.

Hedging Strategy Suggested For Importers And Exporters

According to Finrex, the current market environment provides an opportunity for importers to purchase dollars during declines in the exchange rate. The firm also suggested that importers consider hedging their dollar exposure for the next month while prices remain relatively favourable.

For exporters, Finrex recommended continuing to sell near intraday highs, allowing them to benefit from any temporary appreciation in the U.S. dollar while managing foreign exchange exposure.

Asian Currencies Mostly Weaker Against Dollar

Across Asia, most regional currencies ended weaker against the U.S. dollar. The South Korean won posted the steepest decline, falling 0.341%, followed by the Taiwan dollar, down 0.306%, and the Indonesian rupiah, which slipped 0.255%.

The Thai baht, Singapore dollar, Philippine peso and Japanese yen also recorded modest losses during the session. In contrast, the Chinese renminbi gained 0.112%, while the Malaysian ringgit edged up 0.012%, making them the only major Asian currencies to register gains against the U.S. dollar.

Dollar Holds Firm Ahead Of Federal Reserve Decision

The U.S. dollar remained close to a one-month high as global markets assessed the possibility of another interest rate increase by the Federal Reserve at its upcoming policy meeting. Whereas hopes in the monetary policy maintained their positive impact on the dollar, the drop in the international crude price reduced worries about the inflation driven by rising energy prices.

The rise in the rupee’s value at the beginning can be attributed to the combination of the favorable domestic environment, including intervention of RBI and oil prices’ softness, and strong dollar. The movement of currency during upcoming sessions will be affected by the situation in the international oil market and other factors.