The Indian rupee opened 2 paise lower at 95.23 against the US dollar on Monday, 6 July, as persistent dollar demand and weakness across Asian currencies continued to weigh on sentiment despite softer crude oil prices.
The local currency came under pressure after declining nearly 1% last week, driven by arbitrage-related outflows, routine dollar purchases by importers, and a stronger US dollar amid expectations that the US Federal Reserve could keep interest rates higher for longer.
According to a Reuters report, although the dollar’s recent rally has paused following weaker-than-expected US June jobs data, traders expect only limited relief for the rupee. They noted that the currency has remained under pressure even as crude oil prices have softened, indicating strong underlying demand for dollars.
“The extent of pressure on the rupee can be gauged from the fact that lower crude oil prices have largely been discounted and the currency is still trading at these levels despite RBI support,” a currency trader at a bank told Reuters, adding that corporates are likely to continue buying the dollar-rupee pair on declines.
The Reserve Bank of India (RBI) has reportedly been selling dollars through state-run banks to defend the 94.80-95.00 zone. However, the rupee’s continued weakness despite these interventions highlights the resilience of underlying dollar demand, according to the Reuters report.
