The Indian rupee opened 2 paise lower at 94.51 against the US dollar on Tuesday, remaining caught between pressure from elevated oil prices, increased dollar demand from companies hedging their foreign-exchange exposure and the Reserve Bank of India’s continued presence in the market.
The rupee’s recovery from around 95.70 to 94.50 has lost momentum as rising crude prices and renewed importer hedging weigh on the currency, bankers told Reuters.
Importers have used the rupee’s recent recovery to lock in their dollar requirements, while expectations of higher crude costs have kept demand for currency hedges elevated.
The Reserve Bank of India, which supported the rupee’s initial recovery through persistent dollar sales, has shifted its role in recent sessions, with the central bank now focused more on absorbing pressure stemming from higher oil prices and elevated US Treasury yields rather than actively pushing the rupee higher, bankers said, according to a Reuters report.
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