Mumbai, Sep 24: The Indian rupee opened lower against the US dollar on Thursday as a renewed rise in crude oil prices and a stronger US dollar added pressure to the domestic currency.
The rupee opened at Rs 95.83 per dollar, down 9 paise from Wednesday’s close of Rs 95.74. The currency remained close to the 96-per-dollar mark as traders tracked movements in global oil prices, US bond yields and expectations around US interest rates.
A stronger dollar has emerged as an important factor behind the rupee's weakness. Fresh US economic data has increased concerns about inflation and strengthened expectations that US interest rates could remain elevated. US Treasury yields also moved higher, making dollar-denominated assets more attractive to global investors.
Higher crude oil prices are adding to the pressure. Brent crude has moved back above the $100-a-barrel level, raising concerns about India's import bill. Since India imports a large share of its crude requirement, a sustained rise in oil prices can increase demand for dollars and put pressure on the rupee.
The currency is also being closely watched for signs of support from the Reserve Bank of India. Traders said RBI intervention has helped limit the rupee's decline around the 96-per-dollar level in recent sessions.
At the same time, RBI Deputy Governor Poonam Gupta has said there is a case for the rupee to stabilise and potentially appreciate from current levels. She has pointed to improving external conditions and a possible strengthening of India's balance of payments as factors that could support the currency over time.
Foreign capital flows remain another important factor for the currency market. Foreign investors have sold around $3.5 billion of Indian stocks and bonds so far in September, adding to pressure on the rupee, although daily flows have remained mixed.
For businesses, continued rupee weakness can raise the cost of imported crude, raw materials, components and other dollar-linked inputs. Exporters, meanwhile, can receive higher rupee revenues when overseas earnings are converted into the domestic currency.
Going ahead, crude oil prices, US Treasury yields, dollar movements, foreign investment flows and global interest-rate expectations are likely to remain key factors shaping the rupee's movement.
