Rupee Breaches 94 Mark, Recovers On RBI Support
The Indian rupee briefly slipped past the 94 per dollar mark for the first time in intraday trade on March 23rd, before staging a recovery to close unchanged at 93.53 against the US dollar, as persistent global and domestic pressures kept the currency volatile.
At the interbank foreign exchange market, the rupee opened weaker at 93.84 and fell sharply to breach the 94 level during the session. However, it later pared losses to end flat, avoiding a record closing low.
The currency has been under sustained pressure, having already weakened significantly in recent sessions. Analysts attribute the decline to a combination of rising crude oil prices, continued foreign institutional investor (FII) outflows, a strengthening US dollar and sharp corrections in domestic equity markets.
Market sentiment has turned cautious amid escalating geopolitical tensions in the Middle East, which have heightened concerns over prolonged disruptions in global energy supplies. The surge in oil prices has particularly weighed on the rupee, given India’s heavy reliance on imported crude.
According to market experts, the rupee is likely to remain under pressure in the near term due to weak global cues and risk-off sentiment. However, intermittent intervention by the Reserve Bank of India is expected to limit excessive volatility and provide support at lower levels.
Since the onset of the conflict in the Middle East, the rupee has depreciated by around 3 per cent, reflecting the broader impact of elevated energy prices and capital outflows. Despite this, it has performed relatively better than some regional currencies, supported by central bank actions.
Globally, the US dollar continues to gain strength, driven by safe-haven demand. The dollar index remained firm during the session, while most Asian currencies traded lower, reflecting broader weakness across emerging markets.
On the domestic front, equity markets witnessed a sharp sell-off, further weighing on investor sentiment. The BSE Sensex fell 1,836.57 points, while the Nifty 50 declined 484.30 points, tracking global risk aversion.
Foreign investors have been consistent sellers in recent weeks, with significant outflows from Indian equities and debt markets. This sustained capital exit has emerged as a key drag on the rupee, especially at a time when external vulnerabilities are rising.
Analysts expect the currency to trade with a negative bias in the near term, with movements closely tied to oil prices, global risk sentiment and central bank actions.
