Rupee Falls 11 Paise to 96.36 Against US Dollar in Early Trade

Mumbai: The rupee depreciated by 11 paise to 96.36 against the US dollar in early trade on Wednesday as crude oil prices rose on renewed geopolitical tensions and demand for the US dollar increased as investors turned to safe-haven assets. Concerns over the safety of oil shipments via the Red Sea and the Strait of Hormuz continue to support crude oil prices, Forex traders said.

It was also stated that the Houthis’ threats to shipping and the ongoing US-Iran hostilities maintained the geopolitical risk premium in the market.

In the interbank foreign exchange market, the rupee opened at 96.36, down 11 paise from the previous close.

On Tuesday, the rupee settled at 96.25 against the American currency.

Meanwhile, the dollar index, which measures the dollar’s strength against a basket of six currencies, is trading at 101.15, down 0.01 percent, as the latest escalation in the US-Iran conflict increased the demand for the US dollar as a safe haven currency.

Global oil reference Brent crude oil was traded at $92.08 per barrel, up 1.18 percent in futures.

Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said that RBI’s measures to attract overseas deposits have created significant foreign exchange inflows, boosting market confidence and providing support to the rupee.

Bhansali said dealers are waiting for the participation of the RBI through state-owned banks to smooth out volatility in the foreign exchange market.

“The central bank appears to be allowing gradual adjustments while preventing disorderly movements,” he added.

In the domestic stock market, the 30-share benchmark index Sensex was traded at 77,070.61 points, down 0.52 percent, while Nifty fell 0.34 percent to 24,104.40 points.

Foreign Institutional Investors on Tuesday purchased shares worth 1,650.16 crore, according to stock exchange data.