Indian Rupee Declines 8 Paise to 96.28 Against US Dollar Amid Expectations of RBI Intervention

Indian Rupee Edges Lower Amid Market Uncertainty

The Indian rupee opened 8 paise lower on May 22, as market participants remained cautious and on the sidelines, awaiting potential dollar sales by the Reserve Bank of India (RBI) to support the currency.

The rupee was trading at 96.28 against the dollar, a slight decline from the previous session's close of 96.20. This change marked a brief respite from an eight-day losing streak, which was likely ended by the RBI's intervention in the market. The central bank's actions ensured that the rupee did not fall beyond 96.50 per dollar.

Analysts from Finrex Treasury Advisors attributed the previous day's improvement in the rupee to a decline in oil prices and emerging signs of a deal between the US and Iran. As a result, the dollar/rupee pair fell to Rs 96.20 per dollar, with the RBI selling dollars to prevent a further decline.

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Market participants are expecting the RBI to aggressively conduct dollar sales in the market to prevent a sharp depreciation in the rupee. Traders believe that the central bank was active in the previous session as well, and the growing confidence in a $5 billion swap auction set to be conducted on May 26 has partially boosted investor sentiment.

The rupee was at risk of slipping beyond the psychological $97 per dollar mark at one point. However, with the RBI likely to maintain its support, the rupee is expected to stabilize at higher levels of the dollar.

Global Market Trends

Globally, Brent crude prices traded near $105 per barrel overnight, as investors remained uncertain about the prospects of a US-Iran peace deal. This development has significant implications for the rupee, which is heavily influenced by global oil prices.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline