Rupee depreciated on Wednesday, tracking the fall in Asian currencies and rising crude oil prices amid uncertainties around the West Asia crisis, dealers said.
The local currency settled at 93.80 per dollar against the previous close of 93.50 per dollar. The Reserve Bank of India (RBI) likely stepped in via dollar sales to curb excess volatility, dealers said.
“The Indian rupee continued its three-day slide as crude oil prices held firm following President Trump's extension of the US–Iran ceasefire. This geopolitical tension, alongside the RBI's move to ease part of currency restrictions and a general ‘risk-off’ sentiment, has kept the rupee under pressure. Technically, spot rupee has resistance at 94.15 and support at 93.40,” said Dilip Parmar, research analyst, HDFC Securities.
Market participants said sustained selling pressure in domestic equities, along with ongoing foreign capital outflows, further dragged down the rupee.
“Rupee was in line with Asian currencies given the selling from foreign investors amid the war,” said a dealer at a state-owned bank. “We will see the rupee slide more amid uncertainties. The RBI was present with PSU banks,” he added.
The rupee has been under pressure this week as traders expected a revival in oil-related dollar demand over the past four days. The domestic unit has depreciated by nearly one rupee since last Friday, when it settled at 92.93 per dollar. Despite multiple measures taken by the central bank, the local currency has continued to depreciate steadily since strengthening to 92.50 per dollar earlier this month.
“SBI was reportedly seen buying dollars on behalf of oil companies, taking the rupee lower. RBI seems to be present at 93.87 to supply these dollars,” said Anil Kumar Bhansali, head of treasury and executive director, Finrex Treasury Advisors LLP. “There was also a possibility of a petrochemical company buying dollars to fund its Russian oil supply,” he added.
The rupee has depreciated by 4.18 per cent during the current calendar year so far. However, the local currency has appreciated by 1.08 per cent in April so far.