Rupee opens 9 paise higher at 92.57 against US dollar

The rupee started trading 9 paise higher at 92.57 against the US dollar on Friday, April 10, amid reduced inflows resulting from the central bank's directive aimed at bolstering the currency, alongside elevated oil prices.

In recent trading sessions, the currency had benefitted from the Reserve Bank of India's decision on March 27 to set limits on banks' onshore positions, which compelled them to liquidate dollars within the local market.

However, as most positions were cleared ahead of the RBI's Friday deadline, a significant source of support for the rupee has diminished, according to bankers, as reported by Reuters.

Without considering the RBI's influence, it's "highly probable" that the rupee's trajectory is downward, a currency trader at a bank stated, noting that he anticipates 92.50 to serve as a significant resistance level that is unlikely to be breached, according to a Reuters report.

According to analysts, two significant factors that have negatively impacted the rupee in recent weeks are elevated oil prices and subdued equity inflows.

Following an initial decline in response to the announcement of a ceasefire between Iran and the U.S., oil prices have started to rise again and remain significantly above their levels prior to the conflict. Concerns persist regarding the longevity of the truce between the U.S. and Iran, as hostilities continue in certain areas.

In Asian trading, Brent crude for June delivery climbed to $96.70, after briefly falling to around $90 immediately following the ceasefire announcement.

In the two sessions following the ceasefire, foreign investors have been net sellers of Indian stocks. Although the rate of outflows has decreased, the ongoing selling activity indicates a significant trend, according to the currency trader, as noted in a Reuters report.

Experts believe that while the U.S. dollar appears stable on the surface, underlying macro conditions point to a “slow growth, sticky inflation” environment. Economic growth has slowed, with GDP revised down to 0.5%, even as inflation remains firm, with core PCE rising 0.4% month-on-month.

At the same time, the labour market is showing early signs of softening, with initial jobless claims increasing by 16,000 to 219,000 in the week ending April 4—the highest level in a month. This mix of slowing growth and persistent inflation is likely to keep the Federal Reserve cautious, reducing the certainty around rate cuts, particularly amid ongoing geopolitical risks.

However, softer economic data and expectations of a ceasefire have kept the dollar relatively subdued for now, offering some support to the rupee.

Technical Outlook

Amit Pabari, MD, Research Team, CR Forex Advisors said that looking ahead, the picture for the rupee appears to be changing. With most of the NOP-related support now fading and global uncertainties still elevated, the scope for further strength seems limited. USDINR is likely to find a base in the 92.20–92.50 zone, with a gradual move higher towards 93.50–94.00 levels.

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