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What is the story about?
The Indian rupee opened slightly higher at ₹89.96 per US dollar on Thursday (January 8), later strengthening to ₹89.90/$, marginally down from Wednesday’s (January 7's) close of ₹89.87/$.
The currency’s movement reflects a mix of domestic and global factors, including Reserve Bank of India (RBI) intervention, rising crude oil prices, foreign fund flows, and a firm US dollar.
Why the rupee moved
The rupee’s movement was largely intervention-driven.
According to Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors LLP, “The RBI capped dollar strength at 90.30 and actively sold dollars at 90.22 levels, preventing further appreciation despite persistent demand from importers and foreign investors.”
However, the currency faces upward pressure from a strengthening US dollar, which has been supported by robust US services data, and mild headwinds from rising crude prices.
Brent crude futures were trading at $60.19 per barrel, up 0.38% in early trade.
Impact of equity markets and foreign flows
Domestic equities have also influenced the rupee.
On Thursday (January 8), the Sensex declined 255.86 points to 84,705.28, and the Nifty slipped 65.9 points to 26,074.85.
Weak equity sentiment, combined with foreign institutional investors (FIIs) offloading equities worth ₹1,527.71 crore on Wednesday (January 7), added to the pressure on the currency.
RBI intervention and market expectations
Traders noted that RBI interventions have historically capped extreme rupee volatility. Bhansali added that while the rupee’s upside seems limited, the downside could extend to 89.50/$ if the central bank continues to manage liquidity and sell dollars strategically.
Global context
The rupee’s near-term trajectory is also shaped by global cues. The dollar index, which measures the greenback against a basket of six major currencies, was slightly higher at 98.69, reflecting broad dollar strength.
Meanwhile, investors are watching crude oil prices closely, as higher oil costs increase import bills and weigh on the rupee.
-With agencies inputs
The currency’s movement reflects a mix of domestic and global factors, including Reserve Bank of India (RBI) intervention, rising crude oil prices, foreign fund flows, and a firm US dollar.
Why the rupee moved
The rupee’s movement was largely intervention-driven.
According to Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors LLP, “The RBI capped dollar strength at 90.30 and actively sold dollars at 90.22 levels, preventing further appreciation despite persistent demand from importers and foreign investors.”
However, the currency faces upward pressure from a strengthening US dollar, which has been supported by robust US services data, and mild headwinds from rising crude prices.
Brent crude futures were trading at $60.19 per barrel, up 0.38% in early trade.
Impact of equity markets and foreign flows
Domestic equities have also influenced the rupee.
On Thursday (January 8), the Sensex declined 255.86 points to 84,705.28, and the Nifty slipped 65.9 points to 26,074.85.
Weak equity sentiment, combined with foreign institutional investors (FIIs) offloading equities worth ₹1,527.71 crore on Wednesday (January 7), added to the pressure on the currency.
RBI intervention and market expectations
Traders noted that RBI interventions have historically capped extreme rupee volatility. Bhansali added that while the rupee’s upside seems limited, the downside could extend to 89.50/$ if the central bank continues to manage liquidity and sell dollars strategically.
Global context
The rupee’s near-term trajectory is also shaped by global cues. The dollar index, which measures the greenback against a basket of six major currencies, was slightly higher at 98.69, reflecting broad dollar strength.
Meanwhile, investors are watching crude oil prices closely, as higher oil costs increase import bills and weigh on the rupee.
-With agencies inputs
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