The rupee opened at 96.34 per US dollar, compared with Tuesday’s (July 21’s) close of 96.24/$, marking a depreciation of 10 paise.
The currency had gained 20 paise in the previous session, closing at 96.24/$ after touching its best level in two weeks. The recovery was supported by dollar inflows following measures announced by the Reserve Bank of India (RBI) to support the rupee.
Market participants said the RBI’s interventions around the 96.50/$ level have helped limit volatility. Traders also expect the central bank to step in further if the rupee approaches its record low of 96.96/$.
“The recent gains were largely driven by position adjustments, with inflow-related developments providing some support to sentiment,” a currency trader said.
Economists said the expected inflows could strengthen India’s foreign exchange reserves and provide the RBI with additional capacity to manage currency movements.
Oil prices add pressure on rupee
The recovery in the rupee came under pressure as crude oil prices extended gains amid rising tensions in West Asia. Brent crude crossed $92.50 a barrel, marking its highest level in nearly six weeks.
Concerns over supply disruptions increased after US forces reported strikes on Iranian military targets, while Kuwait reported drone attacks.
Higher oil prices pose a challenge for the rupee as India is a major crude importer. A sustained rise in crude prices can widen the trade deficit and increase demand for dollars from oil importers.
Rising geopolitical risks have also pushed up US Treasury yields, with the 10-year US Treasury yield rising to 4.64%, its highest level in two months, making dollar assets more attractive.
-With Reuters inputs
