The rupee opened 6 paise lower at 96.26 against the US dollar on Friday, 22 May, tracking weakness in Asian currencies and showing limited follow-through after the Reserve Bank of India’s intervention-led rebound in the previous session.
The domestic currency had declined 2.5% over the past nine sessions and was nearing the 97-per-dollar mark for the first time before RBI intervention helped stabilise it. According to a Reuters report, market participants are now closely watching whether the central bank steps in again to support the rupee amid persistent external pressures.
Analysts noted that the rupee will face challenges amid weakness across many Asian currencies, though it may receive some support from the recent decline in oil prices. The dollar index remained close to a six-week peak.
According to experts, the recent cooling in crude oil prices has offered temporary relief to the rupee after weeks of pressure from elevated energy costs and geopolitical uncertainty. Brent crude eased near $ 104 per barrel following constructive comments from US Secretary of State Marco Rubio on diplomatic discussions with Iran, helping improve market sentiment.
Experts also noted that confidence around the Reserve Bank of India’s planned $5 billion buy-sell swap auction on May 26 has supported the domestic currency. Market participants believe the move could improve banking system liquidity and help the RBI manage excessive forex volatility more effectively.
Despite global headwinds, India’s macroeconomic indicators remain resilient, with the HSBC Composite PMI for May staying strong at 58.1. However, experts caution that the US dollar remains firm globally after strong US manufacturing data reinforced expectations that the Federal Reserve may keep interest rates elevated for longer, limiting further gains in emerging-market currencies like the rupee.
(more to come