Rupee opens 6 paise higher at 95.38 against US dollar

The Indian rupee opened 6 paise higher at 95.38 against the US dollar on Friday, 14 August, gaining some relief from a pullback in crude oil prices after coming under sustained pressure through the week.

The rupee is down about 0.2% for the week, although bankers said the modest decline does not fully reflect the currency's underlying pressure.

The Reserve Bank of India’s near-daily interventions across multiple levels have helped absorb persistent dollar demand and limit the rupee’s decline, keeping movements relatively contained.

Bankers said the rupee could have weakened significantly more in the absence of RBI intervention. Maturities in the non-deliverable forward (NDF) market and strong dollar demand from importers remained key sources of pressure on the domestic currency.

Oil market

Experts said the day-to-day movement in crude prices may be masking deeper supply concerns in the physical oil market. Vessel traffic through key regional waterways remains well below pre-war levels, with only a handful of ships crossing on some days compared with nearly 120 vessels a day before the conflict.

While Brent crude is trading around $87 a barrel, tanker freight rates have risen nearly 33% since early July, pointing to continued supply and transportation risks despite signs of calmer headlines.

According to experts, crude’s effective price floor has also shifted higher, with $80 a barrel emerging as the new base, up from around $60 before the war. For oil-importing economies such as India, this higher baseline could continue to weigh on the currency and external balances. Going forward, actual vessel traffic and freight costs could offer a better gauge of supply conditions than individual reopening announcements, they added.

Softer US data offers relief to Rupee

Experts said the dollar has also started losing some momentum after US producer prices remained unchanged in July, below the 0.2% increase expected by markets. The softer PPI reading, along with weaker-than-expected consumer inflation and jobs data, has reduced expectations of a Federal Reserve rate hike.

As a result, the Dollar Index has eased from recent highs near 100, offering some relief to emerging-market currencies, including the rupee.

Foreign portfolio investors have also remained supportive. FPIs have invested a net $1.7 billion in Indian equities so far in August, following $2.1 billion of inflows in July after four consecutive months of selling.

Experts said a less hawkish US rate outlook and continued FPI inflows are currently providing key support to the rupee, helping cushion the impact of elevated crude prices and persistent external pressures.

Rupee Outlook

According to Amit Pabari, MD, Research Team, CR Forex Advisors, the 95.00–95.10 zone remains a key support for USD/INR. Having broken above 95.30 earlier this week, the path towards 95.80 and eventually 96.20 stays open. Foreign inflows and a softer dollar are providing support, but the broader structural picture still tilts towards rupee depreciation.

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