USD vs INR: Rupee slips 33 paise to open at fresh low of 96.86 against US dollar

USD vs INR: The Indian rupee slipped to a fresh record low against the US dollar on Wednesday, weighed down by elevated crude oil prices and a spike in global bond yields amid concerns over stalled US-Iran peace talks.

The local currency opened 33 paise lower at 96.86 per dollar, down from its previous close of 96.53. The rupee eclipsed its all-time low of 96.6150 hit in the previous session. The currency is down 6% since the Iran war began in late February.

The domestic currency thereafter weakened further to 96.96 against the US dollar as elevated crude oil prices are raising concerns about a fresh global inflation surge. This has, in turn, pushed global bond yields to multi-year highs, hurting risk appetite across equity markets.

Persistently high energy prices, coupled with weak foreign capital flows and rising global yields, have strained India’s external position, raising concerns over a widening balance of payments deficit in the current financial year.

Meanwhile, the Indian stock market opened lower amid persistent concerns over high crude oil prices and sustained foreign fund outflows.

The Sensex lost 394.36 points, or 0.52%, to 74,806.49, while the Nifty 50 declined 160.75 points, or 0.68%, to open at 23,457.25.

Foreign Institutional Investors (FIIs) remained net sellers in the cash market, offloading equities worth ₹2,457.49 crore. In contrast, Domestic Institutional Investors (DIIs) continued to provide strong support to the market, purchasing equities worth ₹3,801.68 crore.

Dollar strength pressures the rupee

The dollar index climbed to near 99.4 as rising oil prices and inflation concerns pushed expectations of prolonged high US interest rates.

Bond yields surge

The US 10-year yield rose above 4.5%, while the 30-year yield crossed 5.1%, strengthening the dollar and hurting emerging-market currencies like the rupee, according to experts.

RBI Dividend offers relief

A record RBI dividend payout of nearly ₹3 trillion may help ease government borrowing concerns and support market sentiment despite persistent foreign outflows and rupee weakness, according to experts.

Rupee Outlook

Amit Pabari, MD, Research Team, CR Forex Advisors, said that, from a technical perspective, the 97.00 zone may offer near-term resistance and trigger a temporary defence in USDINR. However, with geopolitical tensions still elevated and no meaningful signs of de-escalation yet, that level is eventually expected to give way, opening the way for the pair to gradually move toward the 97.50–98.00 range unless some positive developments emerge on the war front.

According to Ponmudi R, CEO of Enrich Money, USD/INR is trading within the ₹96.80– ₹96.90 zone, hitting new highs and edging closer to the ₹97 level while sustaining near all-time highs at the upper end of the ascending trendline structure.

"Immediate resistance stands at new highs near ₹97– ₹97.20; a sustained move above this zone could extend weakness toward ₹97.5, with ₹98 emerging as a near-term possibility should current factors persist. On the downside, ₹96.50 acts as immediate support, with ₹96.3 and ₹96 as stronger bases should the pullback take hold.

The near-term bias remains cautiously bullish in favour of the US dollar, driven by persistent dollar demand amid ongoing geopolitical tensions, although any meaningful intervention by the Reserve Bank of India could help moderate volatility in the near term," said Ponmudi.

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