Rupee began Thursday on a positive note, rising 0.1% against the US dollar. The currency opened at 96.49 against the greenback, compared with its previous close of 96.56, after ending the last session at its weakest level in more than two months.The modest recovery comes even as rupee continues to face pressure from rising crude oil prices. Traders expect the currency to remain under strain through the day, with the rupee seen moving in the 96.50-96.70 range. Intervention by the Reserve Bank of India (RBI), however, is expected to limit sharper losses.“It is difficult to see any meaningful relief for rupee if oil prices keep moving higher like this,” a currency trader at a private sector bank told Reuters.“In fact, considering the current news flow, the risk of Brent crossing the $100 mark and moving higher is increasing.”The rupee has remained under pressure since fresh tensions flared between the US and Iran, triggering another rally in crude oil prices.Although recent RBI measures attracted foreign inflows and helped cushion the currency from steeper losses, traders say those gains are increasingly being offset by the continued rise in oil prices.Brent crude has climbed above $96 a barrel, its highest level in six weeks, after the US carried out another round of strikes on Iran-linked assets and Yemen’s Houthis, including attacks near key shipping lanes in the Red Sea. The Houthis have threatened vessels carrying Saudi crude, adding to concerns over potential supply disruptions.ING said in a note that, given the renewed risks to shipments through the Persian Gulf and the threat to Saudi crude exports via the Red Sea, Brent prices at current levels may still be undervalued.Separately, fresh data released by the RBI on Wednesday showed the central bank was a net seller of $6.1 billion in the foreign exchange market in May, when the rupee came under heavy pressure from the surge in oil prices.The RBI bought $22.2 billion and sold $28.3 billion during the month, compared with net dollar sales of $8.9 billion in April.Back in May, rupee had touched a record low of 96.96 per dollar before recovering on the back of sustained RBI intervention and measures designed to boost dollar inflows, including tax cuts on foreign debt investments and incentives for overseas foreign currency deposits.The RBI’s net outstanding forward dollar sales rose to a record $106.6 billion at the end of May from $95.3 billion a month earlier. Its gold holdings remained unchanged at 880.52 metric tonnes since May 22.The apex bank also said foreign investors were net sellers in Indian equities until June, but sentiment improved after measures to support the rupee were announced.According to the bulletin, bond markets attracted foreign inflows in June, which have continued into July. Equity markets have also recorded inflows this month, while India’s foreign exchange reserves remain sufficient to cover 10 months of imports.Meanwhile, Dalal Street opened on a weak note, with benchmark indices falling nearly 0.5% in early trade. BSE Sensex was trading at 76,520.58, down 234.47 points or 0.31%, while NSE Nifty50 slipped below the 24,000 mark.
