Rupee Falls 44 Paise to 94.82 Against Dollar: Why It Fell

Mumbai: The Indian rupee ended a rough Thursday session 44 paise lower at 94.82 (provisional) against the US dollar, dragged down by weak domestic equities and a sharp jump in crude oil prices.

The slide comes a day after the rupee gained 53 paise to close at 94.38, wiping out most of that rise.

How the session played out

At the interbank foreign exchange market, the rupee opened at 94.47 and slipped through the day to an intra-day low of 94.94 before settling at 94.82. Forex analysts said it started on a flat-to-weaker footing, with sluggish stocks and rising oil prices setting the tone.

Why crude is hurting the rupee

Rising tensions in West Asia were the main global factor. Analysts pointed to escalating attacks by Yemen’s Houthis on Saudi Arabia’s energy infrastructure, which hurt global market sentiment. Sunny Aggrawal of SBI Securities said Brent crude jumped about 3 per cent after attacks on a Saudi Aramco oilfield and reports of a possible escalation in the conflict after the US mid-term elections.

This matters for India because the country imports most of its oil, so costlier crude raises the dollar demand from oil importers and puts pressure on the rupee.

What softened the blow

Two things kept the fall from being worse. The dollar index, which tracks the greenback against six major currencies, eased 0.17 per cent to 101.60, and US Treasury yields declined. Forex traders also said dollar liquidity improved after the Jio Platforms IPO drew strong investor demand, and that hopes of a US trade agreement could bring structural inflows.

What to watch

Crude oil moves, West Asia developments and equity flows will likely keep driving the rupee in the near term. Currency traders will also watch the dollar index for further direction.