Indian Rupee Recovers, Reaches New High Above 95 as Markets React to Hawkish Fed and Rising Brent Crude Prices

Rupee Falls Below 95 Against Dollar as Hawkish Fed and Higher Oil Prices Weigh on Sentiment

The Indian rupee opened 17 paise lower on April 30, crossing the psychological 95 a dollar mark due to a hawkish tilt from the United States Federal Reserve and persistently higher Brent crude prices. The rupee opened at 95.02 against the dollar after ending the previous session at a record closing low of 94.85, marking the sixth consecutive session of decline.

The currency is on course to log its third consecutive weekly decline, having wiped out nearly all of the gains made earlier in the month following the central bank move to curb excessive speculation. This decline is particularly significant as it marks the first time the rupee has crossed the 95 mark since March 30, when restrictions on the offshore non-deliverable forwards markets (NDF) were put into place.

The Federal Open Market Committee (FOMC) left the interest rate range unchanged at 3.50 percent to 3.75 percent on April 29, with the decision being the most divided one since 1992, as four policymakers dissented. The monetary policy outlook was clouded by the Iran war and elevated Brent crude prices. Brent crude jumped over 4 percent overnight and was trading at $123 a barrel in the morning following reports that the US is prepared to extend the blockade of Iranian ports until Tehran agrees to a nuclear deal.

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The currency has drifted back toward record lows as the impact of central banks' rupee supportive measures faded, with concerns over India's exposure to higher energy prices weighing on sentiment. Importers are aggressively hedging their exposure to shield against a potential sharp slide in the rupee, traders say. The Reserve Bank of India (RBI) has been intervening, albeit not aggressively, to prevent a free-fall, traders said.

Rupee Performance Over the Last Few Sessions

According to Amit Pabari, managing director at CR Forex Advisory, "Right now, the rupee is no longer trading in isolation. It is reacting to three dominant forces: oil, capital flows, and central bank policies. Technically, 93.50–93.80 remains a strong support zone, and on the upside, 95–95.20 will act as a resistance band."

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