Rupee opens 7 paise lower at 95.06 against US dollar

The Indian rupee opened 7 paise weaker at 95.06 against the US dollar on Tuesday, 2 June, amid continued volatility in crude oil prices driven by uncertainty surrounding US-Iran negotiations and sustained foreign investor selling in Indian equities.

Market participants noted that despite ongoing portfolio outflows and crude oil prices hovering near $ 100 per barrel, the rupee has largely avoided sharp depreciation in recent sessions, supported by the central bank's active intervention in the foreign exchange market.

According to exchange data, foreign portfolio investors (FPIs) have sold nearly $2.5 billion worth of Indian equities over the past two trading sessions. Since the outbreak of the Iran conflict in late February, cumulative foreign outflows from Indian stocks have reached almost $25 billion.

Brent crude oil prices

Meanwhile, Brent crude oil prices retained most of the gains from the previous session in early trading on Tuesday, as uncertainty persisted over the future of US-Iran talks.

US President Donald Trump stated on Monday that discussions with Iran were continuing. However, Iran’s Tasnim News Agency reported that Tehran had suspended indirect negotiations with Washington, adding to concerns over global oil supply and price stability.

India's economic fundamentals

According to market experts, India's economic fundamentals remain resilient despite growing global uncertainties. Recent data showed that industrial production expanded 4.9% in April, while manufacturing output rose 6.2%, indicating that domestic growth momentum remains intact even under a revised statistical series.

However, analysts note that investor sentiment is being shaped largely by developments in the Middle East. Fresh military exchanges involving Iran and ongoing Israeli operations in Lebanon have kept energy markets on edge. At the same time, diplomatic efforts continue, with US President Donald Trump expressing optimism about progress in talks with Iran and the possibility of extending the truce and reopening the Strait of Hormuz.

Experts said this mix of geopolitical risks and diplomatic optimism helped keep the rupee largely stable at 94.99 per dollar on Monday.

Going forward, markets will focus on the RBI's 5 June policy decision and ongoing India-US trade negotiations, both of which could influence currency movements and investor sentiment in the near term.

Rupee Outlook

Amit Pabari, MD, CR Forex Advisors, said that technically, the 95.50–95.75 zone continues to act as strong resistance for USDINR, while the 94.50 region is expected to provide support on the downside. As long as crude oil prices remain under control and global risk sentiment does not deteriorate significantly, the pair is likely to trade within the near-term 94.50–95.50 range.

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