Rupee slips slightly against dollar: Here’s what traders are watching

India’s rupee opened weaker on Tuesday (June 30), slipping 3 paise to 94.57 against the US dollar compared with Monday’s (June 29's) close of 94.54/$, tracking losses in Asian peers and persistent dollar demand from importers.

The domestic currency remained under pressure despite relatively stable crude oil prices, as underlying forex flows and a stronger dollar index limited any meaningful recovery. Traders said the rupee continues to face resistance near the 94.00–94.20 zone, a level it has struggled to breach in recent sessions.

On Monday (June 29), the rupee had strengthened briefly to an intraday high of 94.25 before giving up gains and settling at 94.54/$, highlighting the fragile nature of the recovery.

The rupee had rebounded sharply from its record low near 97 per dollar touched in mid-last month, aided by easing crude oil prices and supportive measures from the Reserve Bank of India (RBI). However, despite Brent crude retreating close to pre-Iran conflict levels, the rupee remains significantly weaker than the 91-per-dollar levels seen before geopolitical tensions escalated.

Currency dealers said importer hedging demand and muted foreign equity inflows are keeping the rupee under pressure even as oil prices soften. Brent crude traded around $72.50 per barrel on Tuesday (June 30) as investors monitored prospects of Iran-US talks in Doha.

“The market is currently range-bound. Dollar/rupee buying interest is emerging around 94.20–94.30, while the RBI is believed to be defending the 94.70–94.90 zone,” a currency trader at a private bank said. Traders expect short-term swings of 30–40 paise within this band.

Globally, the dollar index edged higher to 101.26 amid expectations that the US Federal Reserve could maintain a hawkish stance on interest rates. The Fed’s latest policy commentary has led markets to reprice rate hike expectations, lending support to the greenback.

Among Asian currencies, the Indonesian rupiah led regional losses, while the Japanese yen hovered near a 40-year low against the dollar,

reflecting broader pressure across emerging market currencies.

Meanwhile, market participants are also closely watching domestic earnings expectations for cues on capital flows. According to V K Vijayakumar, Chief Investment Strategist at Geojit Investments, sectors such as banking, financial services, healthcare, power and capital goods are expected to post healthy June-quarter results, which could support investor sentiment in the coming weeks.

“With Brent crude, US bond yields and the rupee stabilising, there are no major near-term triggers for the market,” Vijayakumar said, adding that banking and financials are likely to lead profitability growth due to strong credit expansion and healthy margins.

-With Reuters inputs