Rupee edges higher to 95.17 against dollar: Key levels and factors to watch

The Indian rupee opened 2 paise higher at 95.17 against the US dollar on Tuesday (October 27), compared with Monday’s (October 26's) close of 95.19, even as elevated crude oil prices and concerns over foreign fund flows continued to weigh on the currency.

Brent crude was hovering near $115 a barrel, close to a six-month high, amid concerns over potential supply disruptions following renewed attacks by Iran-aligned Houthis on Saudi Arabia.

Higher crude oil prices can increase India's import bill

and demand for dollars, putting pressure on the rupee. A weaker currency can also raise the cost of overseas travel, education and imported goods.

Rupee outlook: 95.30 level in focus

The rupee's recovery towards 94.30 last week, driven largely by RBI intervention and one-off inflows, is facing renewed pressure amid weak portfolio flows and elevated oil prices.

Currency traders are watching the 95.30 level, around which the Reserve Bank of India (RBI) has reportedly intervened more aggressively. A sustained break above this level could expose the rupee to further weakness towards 96 per dollar, traders said.

Axis Bank Research, in its October 26 market update, noted that IPO inflows and RBI intervention had influenced rupee movements, while the currency's forward market remained volatile amid fluctuating flows.

It highlighted the role of crude oil prices and foreign fund flows in currency movements. The data showed Brent crude at $116.72 a barrel on October 23, up from $109.55 a week earlier, while weekly foreign portfolio investor flows showed equity inflows of $147.93 million and debt outflows of $212.16 million.

Elevated oil prices can increase India's import bill and dollar demand, while sustained foreign investment outflows can add to pressure on the rupee.

-With  Reuters inputs