The Indian rupee weakened 8 paise to 95.25 against the US dollar in early trade on Monday, according to Business-Today, as a firmer greenback and higher global crude oil prices put pressure on the currency. The decline was limited by foreign institutional investor (FII) inflows and the country's stronger foreign exchange reserves, forex traders told the publication.
Rupee opens lower in interbank trade
The rupee began the session at 95.18 at the interbank foreign exchange market before moving down to 95.25, the report said. That followed a week in which the currency had ended 5 paise higher at 95.17 against the US dollar, leaving the pair firmly in a narrow band. According to Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, "USD/INR remained range-bound around 95.20-95.30" with the rupee ending Friday's session marginally stronger.
Dollar index and crude prices
External pressures were visible across markets. The dollar index, which tracks the US currency against a basket of six currencies, climbed 0.17 per cent to 99.70, making the rupee less competitive against the greenback. At the same time, Brent crude futures gained 0.91 per cent to trade at USD 84.31 per barrel, adding to India's import bill and undermining the rupee's outlook, the report noted.
FII inflows and forex reserves
Two factors helped cushion the fall, according to the report. Foreign institutional investors purchased equities worth Rs 480.24 crore on a net basis on Friday, exchange data showed. Additionally, India's foreign exchange reserves increased by $10.512 billion to $692.866 billion in the week ended July 31, based on RBI data released on Friday. That came on top of a USD 6.118 billion rise in the previous reporting week, when reserves stood at $682.354 billion.
The table below summarises the key numbers:
| Indicator | Level / Value | Change |
|---|---|---|
| USD/INR (open) | 95.18 | — |
| USD/INR (current) | 95.25 | -8 paise |
| USD/INR (Friday close) | 95.17 | +5 paise vs prior week |
| Dollar index | 99.70 | +0.17% |
| Brent crude futures | USD 84.31/barrel | +0.91% |
| Forex reserves (week to Jul 31) | $692.866 billion | +$10.512 billion |
| Forex reserves (prior week) | $682.354 billion | +$6.118 billion |
| FII net equity purchase (Friday) | Rs 480.24 crore | — |
Treasury outlook and RBI watch
"Overall, USD/INR remained range-bound around 95.20-95.30, with the rupee ending the session (on Friday) marginally stronger. Strong forex reserves also provided confidence and limited dollar-demand pressure," Bhansali said.
Bhansali expects exporters and importers to drive near-term levels. "Exporters may sell upticks up to 95.40 on Monday while importers are likely to buy dips at 95. Traders will keep a close watch on developments in West Asia as well as the Reserve Bank of India (RBI)," he said.
Equity markets
The rupee's reaction came as domestic equities opened marginally lower on Monday. The Sensex fell 19.38 points to 78,479.79 in early trade, while the Nifty slipped 5.10 points to 24,567.45, according to the report.
For treasury teams and trade finance professionals, the persistence of a 95.20-95.30 range with resistance at 95.40 offers a clear tactical framework: exporters can sell into rallies near 95.40, while importers can hedge dips near 95. The RBI's substantial reserve accumulation — $10.5 billion in a single week — provides a cushion against external shocks, though crude price movements and West Asian developments remain the focus, as Bhansali noted.
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