Daijiworld Media Network - Mumbai
Mumbai, Aug 12: The rupee slipped 6 paise to 95.42 against the US dollar in early trade on Wednesday, weighed down by a sharp rise in Brent crude prices towards USD 90 a barrel as hopes of a quick US-Iran agreement and reopening of the Strait of Hormuz faded.
Forex traders said uncertainty over the Strait of Hormuz remained the key factor driving Brent crude prices higher. Markets have become increasingly sceptical about a quick agreement between the US and Iran, while reports of attacks on shipping have renewed concerns over physical oil supplies.
At the interbank foreign exchange, the rupee opened at 95.40 against the US dollar before weakening further to 95.42, down 6 paise from its previous close.
On Tuesday, the rupee had declined 6 paise to settle at 95.36 against the US dollar.
“With Brent now near USD 90 per barrel, INR/USD at 95.50 becomes the immediate level to watch, followed by 95.80-96.00 if oil remains elevated,” said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP.
Brent crude, the global oil benchmark, was trading 1 per cent higher at USD 89.80 per barrel in futures trade.
“Rupee opened at 95.42 with oil prices slightly down at USD 89.36 per barrel while the dollar index was at 99.83 virtually unchanged. Oil companies continue to buy US dollars for their daily requirements while RBI continues to support the rupee at various levels daily,” Bhansali said.
Meanwhile, the dollar index, which measures the greenback's strength against a basket of six major currencies, was trading at 99.87, up 0.05 per cent.
“Markets are largely in wait-and-watch mode ahead of the US inflation data, with the dollar receiving some support from elevated oil prices but limited by expectations that inflation may continue to moderate,” Bhansali said.
In the domestic equity market, the Sensex fell 35.99 points to 78,097.31 in early trade, while the Nifty declined 31.15 points to 24,444.55.
Foreign institutional investors bought equities worth Rs 258.55 crore on a net basis on Tuesday, according to exchange data.