Rupee Opens Lower At 94.95 Against U.S. Dollar Amid Elevated Brent Crude Prices

The Indian rupee opened four paise lower at 94.95 against the U.S. dollar on May 4, extending weakness seen in recent sessions as high crude oil prices and uncertainty in West Asia continued to weigh on market sentiment.

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The domestic currency had settled at 94.91 against the dollar in the previous trading session. On April 30, the rupee had fallen to an all-time low of 95.33 after Brent crude briefly crossed the $120 per barrel mark. Currency and fixed income markets remained closed on May 1 due to Maharashtra Day.

According to Reuters, the rupee has declined nearly 2% over the past eight trading sessions amid sustained pressure from rising oil prices and stronger demand for dollars from importers and refiners.

Brent Crude Remains Above $100

Brent crude futures were trading near $108 per barrel on May 4 after the benchmark contract rolled over to July futures.

Oil prices remained elevated despite comments from U.S. President Donald Trump stating that the U.S. could help guide stranded neutral vessels through the Strait of Hormuz. However, no detailed plan was announced, while negotiations between the U.S. and Iran remained unresolved.

The Strait of Hormuz remains a key global shipping route for crude oil supplies. Continued disruptions and geopolitical tensions in the region have supported higher crude prices in recent weeks.

Higher global crude prices increase India’s import bill as the country imports a significant portion of its crude oil requirements. Elevated oil prices also impact the current account deficit and increase demand for U.S. dollars from oil marketing companies.

RBI Intervention In Focus

Market participants expect the Reserve Bank of India (RBI) to continue monitoring currency movements after the rupee touched record low levels last week.

The traders noted that the central bank probably had entered the foreign exchange market after the rupee fell below the 95 level vis-à-vis the dollar. Also, the dollar index was steady in the international market on safe-haven flow due to geopolitical risks and higher crude oil prices.

The local share markets were also volatile on account of changes in crude oil prices, international events, and results of assembly elections held on May 4. The rupee is expected to be volatile depending upon developments regarding international crude oil prices and geopolitics, particularly in West Asia