Rupee gained ground against the US dollar on Monday, helped by softer crude oil prices and a positive trend in domestic equities. The currency strengthened as investors looked for relief from the recent pressure caused by expensive oil and geopolitical uncertainty.
The rupee opened at ₹95.82 against the US dollar and strengthened further to ₹95.72, gaining 24 paise from its previous close. The currency had settled at ₹95.96 in the previous session.
The recovery came as crude oil prices eased after a sharp rise last week. Brent crude slipped towards $102 a barrel, giving some relief to oil-importing countries such as India.
Oil prices have become a major factor for the rupee as tensions in West Asia continue. The ongoing US-Iran conflict has raised concerns about possible disruptions to oil supplies from the region. Any fresh escalation could push crude prices higher and put pressure on the Indian currency again.
Lower oil prices, on the other hand, can help reduce India’s import bill and ease pressure on inflation and the country’s external finances.
The rupee also received support from a strong opening in the Indian stock market. The Sensex gained more than 400 points, while the Nifty 50 moved above 23,350 in early trading.
Foreign investor activity provided another positive signal. Foreign Institutional Investors bought Indian equities worth around ₹599 crore on Friday, ending a seven-session selling streak. Continued foreign buying could bring more dollar inflows into the domestic market and support the rupee.
However, foreign fund flows remain a concern. Investors have pulled significant amounts from Indian equities during September, keeping the currency vulnerable to sudden changes in global risk sentiment.
The market is also watching initial public offering (IPO) activity for possible foreign fund inflows. Upcoming issues and new listings could attract overseas investment and increase dollar supply in the domestic market.
At the same time, demand for dollars from importers remains a source of pressure. Oil companies in particular need dollars to pay for crude imports, making movements in global oil prices important for the currency.
The US dollar also remained relatively firm against major currencies, limiting the rupee’s gains. Traders are watching US monetary policy and interest-rate expectations closely, as changes in the dollar can influence flows into emerging markets.
The Reserve Bank of India (RBI) is another key factor in the currency market. The central bank has been monitoring movements in the rupee and intervening when necessary to prevent excessive volatility.
India’s foreign exchange reserves stood at around $780.78 billion for the week ended September 11, although reserves declined by about $4.92 billion during the week.
The rupee is therefore being influenced by several competing factors. Cheaper crude oil, gains in Indian shares and foreign buying are providing support, while geopolitical risks, dollar demand and global currency movements remain potential sources of pressure.
With the rupee trading close to the ₹96-per-dollar level, traders are expected to keep a close watch on crude oil prices, US-Iran tensions, FII flows, IPO activity and RBI intervention for further direction.
