Rupee weakens to 95.68 as oil prices, dollar demand weigh

The rupee opened at 95.68 against the US dollar at the interbank foreign exchange market, extending losses from Monday's close of 95.61. The currency weakness marks the continuation of a downward trend driven by macroeconomic headwinds in global energy markets and domestic policy shifts.

Foreign exchange traders attributed the rupee's decline primarily to elevated Brent crude prices hovering near USD 91 per barrel, which has increased dollar demand for oil-related imports. Geopolitical tensions between the US and Iran over the Strait of Hormuz have added upward pressure on crude costs, with no discernible progress in peace negotiations exacerbating market uncertainty.

"The rupee opened lower as oil prices rose amid ongoing US-Iran tensions, with no breakthrough in diplomatic efforts," said Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP. Beyond energy concerns, the Reserve Bank's decision to conclude its concessional Foreign Currency Non-Resident (B) forex-swap facility ahead of schedule has raised questions about future dollar availability in the market.

The dollar index, which measures the greenback's performance against six major currencies, was trading at 99.63, down marginally by 0.01 per cent. Market participants remain focused on crude oil developments and central bank policy signals as key drivers of rupee movement in coming sessions.