Rupee Opens Flat at ?85.65 Amid Dollar Weakness and Rising Oil Prices

The Indian rupee opened marginally weaker on Wednesday at ?85.65 against the US dollar, slipping by 1 paise from the previous close of ?85.64. The domestic currency's movement was influenced by a softer US dollar index and escalating global crude oil prices.?

Dollar Index Decline Offers Limited Support

The US Dollar Index, which measures the greenback against a basket of six major currencies, fell below the 100 mark, trading 0.44% lower at $99.67. This decline followed cautious remarks from Federal Reserve officials regarding the US economic outlook, including concerns about a potential weakening labour market and rising inflation. Despite the dollar's softness, the rupee's gains were capped due to other prevailing factors.?

Crude Oil Prices and Geopolitical Tensions Weigh on Rupee

Brent crude prices rose by 1.48% to $66.35 per barrel amid reports of escalating geopolitical tensions, particularly concerning potential Israeli actions on Iranian nuclear facilities. Higher oil prices exert pressure on the rupee, given India's significant dependence on oil imports.?

Foreign Portfolio Outflows Add to Currency Pressure

The rupee's depreciation was further influenced by foreign portfolio investors (FPIs) selling equities worth over ?10,000 crore in the cash market, marking the highest outflow in over three months. The rupee's fall on Tuesday was attributed to dollar purchases by oil companies and a stock selloff by global funds.

Technical Outlook

Analysts suggest that the dollar-rupee pair is expected to face strong resistance near the ?85.60-?85.80 levels, with support around ?85.20. The rupee has declined by over 1.3% so far this month, reflecting the combined impact of global and domestic factors.

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