MUMBAI — The Indian rupee reversed early morning losses to trade 4 paise higher at 95.40 against the US dollar in early interbank foreign exchange transactions on Thursday, supported by a slide in international crude oil prices and sustained foreign portfolio inflows.
Trading opened on a weaker note, with the local currency slipping 8 paise from its previous closing level to touch an intra-day low of 95.52 per dollar, compared to its Tuesday settlement of 95.44. Indian currency markets were closed on Wednesday for Id-e-Milad. However, fresh supply of the greenback and easing energy costs helped the domestic unit recover lost ground as the session progressed.
Easing Crude Prices and Geopolitical Dialogue Offer Relief
Forex dealers attributed the intraday recovery primarily to softer Brent crude prices, which dipped below the $90 per barrel mark. Global benchmark Brent crude fell 0.41% in futures trade to $87.48 per barrel.
Market sentiment picked up following reports of ongoing diplomatic talks between Iran and Oman aimed at establishing a temporary shipping corridor through the strategic Strait of Hormuz. Although an official agreement remains pending, the continuation of talks relieved immediate market anxieties over severe disruptions to global energy supply lines.
Simultaneously, the US Dollar Index, which measures the strength of the greenback against a basket of six major global currencies, edged down by 0.04% to 99.14.
Central Bank Actions and NRI Capital Inflows Provide Support
Analyzing underlying market dynamics, Amit Pabari, Managing Director at CR Forex Advisors, noted that structural inflows continue to underpin the rupee despite broader macroeconomic headwinds.
"While international focus remains anchored on oil prices and dollar index movements, a significant domestic trend has emerged," Pabari observed. "After selling dollars for two consecutive months to defend the currency, the Reserve Bank of India turned into a net buyer in June, acquiring approximately $561 million."
Pabari highlighted that specialized liquidity initiatives launched by the RBI—specifically targeting Foreign Currency Non-Resident (Bank) deposits [FCNR(B)], Overseas Foreign Currency Borrowings (OFCB), and External Commercial Borrowings (ECB)—have collectively generated nearly $73 billion in foreign exchange inflows as of August 21.
With the dedicated FCNR(B) deposit window remaining active until August 31, market observers expect continued near-term capital support for the domestic currency. Analysts project the 95.15–95.20 range to serve as a key technical support zone for the USD/INR pair, though the currency may face gradual depreciation pressures toward the 96.20–96.50 trajectory over coming weeks.
Mixed Signals Across Equity Markets
In domestic equity markets, main benchmark indices experienced cautious trading. The BSE Sensex edged down 45.17 points to 77,422.70 in early morning trade, while the NSE Nifty 50 shed 6.40 points to trade around 24,202.45.
According to provisional stock exchange data, Foreign Institutional Investors (FIIs) remained net buyers in the Indian equity markets on Wednesday, purchasing shares worth ₹502.63 crore.
