Rupee Slips to One-Month Low Amid Global Uncertainty
The Indian rupee opened 16 paise weaker at Rs 86.57 against the US dollar, marking its lowest level in a month, as global cues and rising crude oil prices weighed on sentiment. The currency had closed at Rs 86.41 on Thursday.
Market participants can expect the rupee to trade within a range of Rs 86.10 to Rs 86.60 through the day, said Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP.
The weakness in the rupee comes amid a firming dollar, rising Brent crude prices, and persistent foreign portfolio outflows.
Global Cues and Crude Oil Prices Weigh on Rupee
Brent crude rose to $69.53 per barrel in early Asian trade, supported by easing geopolitical tensions and developing trade agreements. “Ongoing restrictions on Russian oil by the EU and temporary Russian export suspensions have tightened global supplies,” said Bhansali
Bhansali added, “The forecast is for a moderate price rise going into the next quarter with an expectation of $70.70 per barrel by September-end.”
Dollar Strengthens on Strong Labor Market Data
The US dollar index traded moderately higher at 97.57, buoyed by strong labor market data. “Jobless claims have fallen for the sixth straight week, reinforcing the strength of the US economy,” Bhansali noted.
The dollar remained firm against major currencies, trading at 1.1741 against the euro and 147.43 against the yen, following the European Central Bank’s decision to hold rates steady at 2%—its first pause after seven consecutive cuts since 2024. “This could signal a potential end to its easing cycle with inflation also reaching the target of 2%,” Bhansali said.
Asian Markets and Currency Movements
Asian equities opened lower, mirroring global caution. The Nikkei fell 0.56%, Hang Seng dropped 0.69%, and Shanghai Composite slipped 0.17%. Meanwhile, Gift Nifty indicated a positive start, up 31 points.
Currency movements reflected broader trends, JPY, CNH, IDR, and KRW all weakened against the dollar, while commodity-exporting economies showed more resilience. “Central banks continue to intervene to manage volatility,” Bhansali said.
Implications for Indian Markets
The rupee’s weakness and the dollar’s strength are likely to have a mixed impact on Indian markets. While a weaker rupee can benefit exporters, it can also increase import costs and inflationary pressures. The Indian economy is highly dependent on imports, particularly oil, and a rising dollar can make these imports more expensive.
In the short term, the rupee’s weakness may lead to a decline in the Indian stock market, as investors become risk-averse and seek safe-haven assets. However, in the long term, a weaker rupee can boost economic growth by making exports more competitive and attracting foreign investment.
Conclusion
In conclusion, the rupee’s slide to a one-month low is a reflection of the global economic uncertainty and the dollar’s strength. While the rupee’s weakness may have short-term implications for Indian markets, it can also benefit the economy in the long term by making exports more competitive and attracting foreign investment.
As always, it is essential for investors to remain vigilant and adapt to changing market conditions. We will continue to monitor the situation and provide you with updates on the Indian stock market and economy.
