Indian Rupee had a slight upward movement on Thursday, gaining by 4 paise to close at 94.84 (provisional) against US Dollar, which was boosted by a reversal in the global crude oil prices. Nevertheless, geopolitical unknowns in the near future, especially the US-Iran relations, kept curbing the appreciation of the currency.
The rupee was traded at the weaker side at the very beginning of the day at 95.01 at the interbank foreign exchange market and fell even further throughout the day to reach an all-time intraday low of 95.34 against the dollar. It dropped early on, but it regained itself towards the end and settled a little higher than it had settled before. On Wednesday, the rupee was down by 20 paise to close at 94.88, which is its previous low.
The market players credited the partial recovery to the declining crude prices that lower the import volume in India, and thus the local currency. The world oil benchmark, Brent crude, declined by 1.65 percent to trade at an average of $116 per barrel in the future markets.
In the meantime, the dollar index, which is used to measure the strength of the US currency against a basket of major currencies fell by 0.36 to 98.47, providing some relief to the emerging market currencies such as the rupee.
Equity markets were also pressured on the domestic front as Sensex and Nifty finished at a lower level amidst the continuing foreign fund outflows. Foreign Institutional Investors (FIIs) divested equities valued at more than 2,400 crore, and this only added to the sentiments of investors.
The rupee is likely to be volatile in the short-run, depending on the trends in oil in the world market, capital flows, and geopolitics.