While RBI intervention was seen during early trade, corporate dollar demand and foreign portfolio outflows weighed on the domestic unit.
Mumbai: The Indian rupee gave up most of its previous session gains, depreciating by 77 paise to settle at 95.71 on Friday as crude oil prices jumped about 5 per cent following renewed exchange of drone strikes between Iran and Israel.
Additionally, stronger-than-expected US jobs data reignited expectations of further rate hikes by the FOMC, dampening global risk appetite and lending further support to the dollar, which strengthened against majors. The US Dollar Index was trading higher at the 100.09 level.
Reacting sharply to the renewed escalation between Israel and Iran, international crude oil prices rose more than 4.8 per cent to trade above the $94 per barrel mark, while domestic crude futures climbed back above ₹9,000. The move reversed much of the recent easing in energy markets as investors once again priced in the risk of supply disruptions and a prolonged closure of the Strait of Hormuz, a critical artery for global oil flows.
While RBI intervention was seen during early trade, corporate dollar demand and foreign portfolio outflows weighed on the domestic unit.
On Friday, the rupee had logged its biggest single-day gain since April 2, strengthening 81 paise to close at 94.94 per dollar as the RBI left its benchmark repo rate unchanged at 5.25 per cent and unveiled a series of measures aimed at attracting foreign capital and supporting the Indian rupee.
Analysts expect the rupee to appreciate on the RBI measures, which could attract $45–55 billion in dollar flows.
The rupee has fallen by 10 per cent year on year in the past 12 months and is Asia’s worst-performing currency.
Dilip Parmar, senior research analyst at HDFC Securities, said, “In the near term, spot USD-INR is expected to consolidate within a range of 94.50 to 96.50.”
According to Bloomberg, the RBI’s net-short dollar book, a measure of the degree it has sold forward its stockpile of the US currency, has risen to about $110 billion–$115 billion across onshore and offshore markets, it said without naming the people. The book was at $95.3 billion in April, down from a record high of $103.1 billion the previous month.
The central bank ramped up its interventions after the rupee weakened to a record low on May 20, almost hitting 97 per dollar.
