Rupee slips 14 paise to 92.42 vs dollar on oil surge, FII outflows

The rupee depreciated by 14 paise to 92.42 against the US dollar in early trade on Tuesday, weighed down by rising crude oil prices and sustained foreign fund outflows amid escalating tensions in West Asia. 

Forex traders said the local currency also faced pressure from a stronger US dollar and cautious sentiment in domestic markets, as investors awaited the US Federal Reserve’s interest rate decision. 

At the interbank foreign exchange, the rupee opened at 92.35 and slipped further to 92.42, marking a 14-paise decline from its previous close of 92.28. On Monday, the currency had ended marginally higher by 2 paise. 

The rupee has been among the worst-performing Asian currencies and recently touched an intra-day low of 92.47 last week. It had closed at a record low of 92.30 on Friday. 

Meanwhile, the dollar index, which measures the greenback against a basket of six currencies, was up 0.19% at 99.65. 

Why are rising crude prices pressuring the rupee?

In the commodities market, Brent crude, the global oil benchmark, rose 2.68% to $102.87 per barrel in futures trade, adding to pressure on the import-dependent domestic currency. 

Despite currency weakness, domestic equity markets traded higher, supported by gains in metal and auto stocks and firm Asian cues. The Sensex rose 0.37% or 280.68 points to 75,768.53, while the Nifty50 advanced 0.38% or 90.42 points to 23,503.95. 

Shares wavered in Asia on Tuesday after a drop in oil prices helped send the US stock market to its best day since the war in Iran began.  

The reprieve in prices for crude was short-lived, with Brent crude climbing nearly 3% early Tuesday to $103.17 a barrel. US benchmark crude also climbed to $96.20 after dipping to about $93 a barrel on Monday. US futures fell back, with the contracts for the S&P 500 and the Dow Jones Industrial Average down 0.3%. 

On the macroeconomic front, government data released on Monday showed India’s trade deficit narrowed to $27.1 billion in February from the previous month. Merchandise exports declined 0.81% year-on-year to $36.61 billion, while imports rose 24.11% to $63.71 billion compared with $51.33 billion a year ago. 

Foreign institutional investors (FIIs) remained net sellers, offloading equities worth ₹9,365.52 crore on Monday, according to exchange data.