The Indian rupee opened marginally stronger at 94.93 against the US dollar on Monday, Oct 26, gaining one paisa from Friday’s close of 94.94.
Despite the mild uptick, market analysts warn that the currency’s recent recovery faces steep challenges and remains vulnerable to slipping past the key 95-per-dollar psychological threshold.
Primary pressure stems from Brent crude prices hovering near $115 a barrel, driven up by geopolitical friction and supply disruption risks in West Asia. As a major crude importer, India faces potential trade deficit expansion and increased foreign exchange demand, creating significant headwinds for the domestic currency.
Furthermore, support from foreign fund inflows tied to the massive Jio Platforms IPO is expected to taper off as the allotment process wraps up on Monday ahead of its Wednesday stock exchange listing.
With these specialised equity-related foreign exchange flows subsiding, the spot market loses a vital cushion that helped stabilise trading within the 94.32 to 94.97 range last week.
Investors are now turning their attention to the US Federal Reserve’s upcoming policy meeting this week for guidance on future interest rate trajectories.
In the absence of sustained IPO capital, market participants expect Reserve Bank of India (RBI) intervention to play a critical role in containing currency volatility.
