Rupee slips 17 paise to 93.07 against US dollar on capital outflows

The rupee weakened 17 paise to 93.07 against the US dollar in early trade on Tuesday, led by continued foreign fund outflows, a stronger US dollar, and elevated crude oil prices amid geopolitical uncertainty. 

The local currency opened at 93.05 before extending losses. This comes a day after the rupee had gained 28 paise to settle at 92.90, supported by measures taken by the Reserve Bank of India (RBI) to reduce volatility. 

Market participants said the USD/INR pair remains sensitive to developments around the US-Iran tensions, with any escalation likely to push crude prices higher and add pressure on the rupee. 

RBI tightened rules to curb speculative trading 

The RBI recently tightened rules to curb speculative trading and capped banks’ net open positions at $100 million, steps aimed at stabilising the currency. 

Geopolitical concerns also remained in focus, with a key deadline linked to the Strait of Hormuz situation expiring on Tuesday and no breakthrough yet on a ceasefire understanding between the US and Iran. 

Rupee to trade in a narrow but volatile band  

Analysts expect the rupee to trade in a narrow but volatile band of 92.50–93.50 in the near term as markets await the outcome of the RBI’s ongoing monetary policy meeting. The decision of the six-member Monetary Policy Committee (MPC), led by Governor Sanjay Malhotra, is scheduled to be announced on Wednesday. 

Globally, the dollar index, which tracks the US currency against a basket of six major currencies, was slightly higher at 100.11. Brent crude prices rose 1.22% to $111.11 per barrel, keeping pressure on oil-importing economies. 

In domestic equities, benchmark indices opened sharply lower. The Sensex declined 824.44 points to 73,282.41 while the Nifty fell 248.95 points to 22,719.30. Foreign institutional investors were net sellers, offloading shares worth ₹8,167.17 crore in the previous session, as per exchange data.