Rupee opens 10 paise lower at 96.34 against US dollar

The Indian rupee opened 10 paise weaker at 96.34 against the US dollar on Wednesday, 22 July, giving up part of the previous session's gains as a renewed rise in crude oil prices, triggered by fresh military exchanges between the United States and Iran, weighed on sentiment.

The currency had posted its strongest single-day gain in two weeks in the previous session, supported by robust inflows linked to a series of measures announced by the Reserve Bank of India (RBI) to bolster the rupee.

According to a Reuters report, traders said the RBI's repeated intervention around the 96.50 level, along with expectations that the central bank would intensify its support as the rupee approaches its record low of 96.96 per US dollar, has helped cushion the currency against sharper losses.

Foreign inflows offer limited relief

Foreign portfolio investor (FPI) flows into Indian equities have turned positive in July after several months of sustained selling. However, the pace of fresh inflows remains modest compared with the large outflows recorded earlier this year, limiting the support for the rupee, according to experts.

The Indian currency closed 11 paise stronger at 96.25 per US dollar on Tuesday, but the recovery appeared more a temporary respite than the start of a sustained rebound, as broader market sentiment remained fragile.

Geopolitical risks continue to escalate

According to experts, the geopolitical backdrop remains challenging, with the United States and Iran exchanging strikes for a tenth consecutive night. The conflict intensified after two American soldiers were killed in an attack in Jordan, prompting US President Donald Trump to warn of retaliation "many times over."

Adding to concerns, Yemen's Iran-backed Houthi rebels announced a naval blockade against Saudi Arabia, threatening crude supplies of nearly 2.5 million barrels per day at a time when shipping through the Strait of Hormuz remains severely disrupted.

Oil and dollar strength add pressure

The impact of the conflict is increasingly evident across global markets. Brent crude has climbed to around $91 per barrel, while the US Dollar Index has strengthened to 101.15, with both moving higher simultaneously.

This combination typically creates a difficult environment for the rupee. Higher oil prices increase India's import bill and boost demand for dollars from oil importers, while a stronger US dollar attracts safe-haven flows globally. Together, these factors tend to outweigh the support from improved foreign inflows, leaving the rupee vulnerable to renewed depreciation.

Rupee Outlook

According to Amit Pabari, MD, Research Team, CR Forex Advisors, domestic inflows are helping but not resolving the underlying pressure. With the conflict widening rather than cooling, the bias stays tilted toward rupee weakness. A sustained move above 96.50 could open the door towards 97.00–97.50 in the coming days. On the downside, 96.00–96.10 should now act as the first support zone.

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