Rupee rises in early trade: How global cues lifted the currency

The rupee advanced in early trade on Wednesday (January 6), supported by a softer US dollar and a sharp decline in global crude oil prices, factors that eased immediate pressure on the domestic currency.

In the interbank market, the rupee opened at 90.20 against the US dollar and strengthened to 89.92, up 26 paise from the previous close. The gain followed a marginal recovery in the prior session, when the currency ended at 90.18 after four days of losses.

Traders said external cues drove the move, with Brent crude slipping over 1% to around $60 a barrel, improving India’s import cost outlook.

The weaker dollar also helped stabilise emerging market currencies.

Flows in the spot market remained balanced. Exporters sold dollars at higher levels, while importers absorbed supply on declines near the 90 mark, limiting sharp intraday swings.

Dealers also pointed to expectations of Reserve Bank of India support after the rupee rose to about 90.10 in the previous session before importer demand and selective dollar buying emerged. While the central bank’s role was not confirmed, the possibility of intervention continued to anchor market sentiment.

Despite the rebound, market participants remained cautious on the broader trend. The rupee had weakened nearly 1% over the past two weeks, and traders said underlying flows still indicate a bias towards gradual depreciation, with RBI action likely focused on moderating volatility.

Domestic cues were mixed.

Equity benchmarks opened lower, and foreign investors remained net sellers in the cash market. In the offshore market, the one-month non-deliverable forward suggested a flat opening, signalling a wait-and-see approach.

Elsewhere in Asia, most currencies edged lower as investors awaited key US economic data due later this week, which is expected to influence expectations around the Federal Reserve’s policy path and direction of the dollar.

-With agencies inputs