Rupee opens 2 paise lower at 94.51 against US dollar

The Indian rupee opened 2 paise lower at 94.51 against the US dollar on Tuesday, remaining caught between pressure from elevated oil prices, increased dollar demand from companies hedging their foreign-exchange exposure and the Reserve Bank of India’s continued presence in the market.

The rupee’s recovery from around 95.70 to 94.50 has lost momentum as rising crude prices and renewed importer hedging weigh on the currency, bankers told Reuters.

Importers have used the rupee’s recent recovery to lock in their dollar requirements, while expectations of higher crude costs have kept demand for currency hedges elevated.

The Reserve Bank of India, which supported the rupee’s initial recovery through persistent dollar sales, has shifted its role in recent sessions, with the central bank now focused more on absorbing pressure stemming from higher oil prices and elevated US Treasury yields rather than actively pushing the rupee higher, bankers said, according to a Reuters report.

Oil pressure persists

Oil prices edged higher on Tuesday, with Brent crude hovering near $97 a barrel as escalating tensions between the US and Iran, along with threats to energy infrastructure in the Gulf, heightened concerns over potential supply disruptions through the Strait of Hormuz.

Brent crude had surged nearly 8% last week amid mounting geopolitical risks.

Goldman Sachs raised its Brent price forecasts by $5 a barrel to $85 for December 2026 and $80 for 2027, assuming disruptions to Middle East shipping continue into next year, according to Reuters report.

However, the investment bank said the risks to its forecasts remain significantly skewed to the upside, particularly in the near term. Under its bullish scenario, Brent crude could climb as high as $120 a barrel.

Rupee Outlook

“The RBI’s intervention has been particularly important in preventing higher oil prices from translating into a weaker rupee,” Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, told PTI.

Bhansali expects the rupee to trade in a range of 94.00–94.75, with crude oil prices near $97 a barrel and the dollar index at 98.74. He said the Reserve Bank of India’s continued dollar sales are likely to help keep the rupee within this range, according to the PTI report.

Market participants are now awaiting India and US CPI data, along with the US Federal Reserve’s FOMC meeting on 16 September, for further cues on the currency’s direction, Bhansali said.

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