The Indian rupee slipped 4 paise to 95.74 against the US dollar in early trade on Tuesday, according to Business-Today, as higher crude prices and dollar demand from importers weighed on the currency. The rupee opened at 95.74 at the interbank foreign exchange market, compared with Monday's close of 95.70, when it had gained 1 paisa against the American currency.
Rupee's two-week range and RBI intervention
Business-Today reported that forex traders said the rupee's movement was being contained by continued intervention from the Reserve Bank of India (RBI) through state-run banks. The intervention came amid weakness in Asian equities and renewed geopolitical uncertainty around Iran.
"Overall, the rupee remains firmly range-bound around ₹95.50–96.00, with oil prices and RBI intervention likely to remain the key near-term drivers," said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP.
According to Bhansali, the rupee has stayed within a narrow range for the past two weeks. Oil companies and the RBI have been buying dollars at the lower end of the range, while the RBI has also been selling dollars around 95.75 to protect the downside to the currency, Business-Today reported.
Dollar index and crude oil
The dollar index, which tracks the US currency against six major currencies, was at 99.04, up 0.04 per cent, according to Business-Today. The index was supported by safe-haven demand following the US escalation of sanctions on Iran, while expectations around Treasury bond buybacks continued to weigh on the dollar.
Crude prices remained a pressure point for the rupee. Brent crude futures, the global oil benchmark, rose 0.30 per cent to $92.45 a barrel.
Equities and foreign investor flows
The rupee's weakness came alongside a softer start for domestic equities. The Sensex fell 30 points to 77,336.32 in early trade, while the broad-based Nifty declined 38.80 points to 24,179.50, Business-Today reported.
Foreign institutional investors, however, remained buyers in the equity market on Monday. Exchange data showed that they purchased equities worth Rs 1,181.66 crore on a net basis.
RBI's swap facility mobilises $73 billion
Separately, Business-Today reported that the RBI's special USD-INR forex swap facility for FCNR(B) deposits, Overseas Foreign Currency Borrowings (OFCB) and External Commercial Borrowings (ECB) had mobilised foreign exchange inflows of $73 billion as of August 21.
Key market snapshot
| Indicator | Reading | Move |
|---|---|---|
| USD/INR (early trade) | 95.74 | 4 paise weaker vs Monday close |
| Previous close | 95.70 | Gained 1 paisa |
| Dollar index | 99.04 | +0.04% |
| Brent crude futures | $92.45/barrel | +0.30% |
| Sensex | 77,336.32 | -30 points |
| Nifty | 24,179.50 | -38.80 points |
| FII net equity purchase (Monday) | Rs 1,181.66 crore | — |
| RBI swap facility inflows (as of Aug 21) | $73 billion | — |
Implications for treasury and trade finance
For finance executives and treasury teams, the rupee's range-bound behaviour defines the near-term hedging environment. Business-Today reported Bhansali's view that the currency remains firmly range-bound around ₹95.50–96.00, with oil prices and RBI intervention as the key near-term drivers. The RBI's two-sided presence — buying dollars at the lower end and selling around 95.75 — gives importers and exporters a defined band, with the central bank actively defending the downside.
The $73 billion mobilised through the USD-INR forex swap facility for FCNR(B) deposits, OFCB and ECB represents a substantial buffer of foreign exchange inflows, according to Business-Today, supporting the currency's range-bound stance. For importers, the pressure from crude at $92.45 a barrel and renewed geopolitical uncertainty around Iran feeds directly into higher input costs, while the RBI's intervention provides some protection against a sharper depreciation. The dollar index's rise on safe-haven demand adds to the cost of hedging for Indian corporates with foreign currency exposures.
Sources:
