Rupee falls 2 paise to close at 94.97 against US dollar

MUMBAI: The rupee traded in a tight range and settled for the day at 94.97 (provisional) on Wednesday, recording a marginal loss of 2 paise as the support from foreign capital inflows was negated by weak local equities and a strong US dollar.

Forex traders said the RBI is keeping a tab on the rupee's fall as Brent crude prices have risen to USD 95 per barrel and the dollar index is hovering around 99.80 on a bout of risk aversion on renewed US-Iran tensions.

Moreover, market participants have raised the probability of a hike in interest rates by the US Federal Reserve in September, pushing US Treasury yields higher and triggering a broad dollar rally.

Investor sentiment also impacted after the 10-year US Treasury yields rose above 4.8 per cent - the highest since January 2025 - following softer-than-anticipated US economic data.

At the interbank foreign exchange market, the rupee opened at 94.97 and touched an intraday high of 94.83 and a low of 94.99 during the session.

At the end of Wednesday's trading session, the rupee was quoted at 94.97 (provisional), lower by 2 paise from its previous close.

"We expect the rupee to trade with a slight negative bias amid renewed geopolitical tensions as the US attacked Iran, leading to a further surge in crude oil prices. Hawkish comments from Fed Chair Kevin Warsh may further pressurise the rupee.

"However, any de-escalation of tensions may support the rupee at lower levels. Traders may take cues from ADP non-farm payrolls and factory orders data from the US. USD-INR spot price is expected to trade in a range of 94.70 to 95.25," said Anuj Choudhary, Research Analyst, Mirae Asset ShareKhan.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 99.82, higher by 0.14 per cent.

Brent crude, the global oil benchmark, was trading higher by 0.44 per cent at USD 95.07 per barrel in futures trade, amid concerns over disruptions to crude supplies through the Strait of Hormuz.

On the domestic equities market front, Sensex dropped 373.93 points to settle at 76,570.35, while the Nifty was down 141.35 points to 23,914.45.

Foreign institutional investors purchased equities worth Rs 1,143.38 crore on a net basis on Tuesday, according to exchange data.