Rupee rose by 11 paise to close at 94.65 against the US dollar on Wednesday as the crude oil moved across the Strait of Hormuz. Brent crude, the global oil benchmark, was trading lower by 2.05 per cent at USD 75.50 per barrel in futures trade. The domestic unit bucked the weakness seen in most of the Asian currencies on Wednesday. It is likely that the RBI intervention shielded the currency from a stronger dollar that rose as traders positioned for potential federal reserve rate hikes.
The rise was backed by positive sentiments in the domestic equity markets and FII inflows. The rupee declined 13 paise to close at 94.76 against the US dollar on Tuesday.
Asian currencies were mostly weaker, with the Korean won down nearly 1% and leading losses in the region. Regional currencies were under pressure even as Brent oil prices slid to $75.60, the weakest since February 27, a day before initial U.S.-Israeli strikes on Iran.
Research analysts expect the local currency to trade with a negative bias on strengthening US dollar amid hawkish Fed and weak global markets. However, falling crude oil prices and progress in the US-Iran talks may support the rupee at lower levels. While the risks from energy supply disruptions have eased, a hawkish repricing of U.S. rate expectations continues to weigh on risk assets.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading at 101.63, up 0.23 per cent hoverign around its strongest level in 13 months.