Forex traders said the rupee remained under pressure amid persistent macroeconomic headwinds, including global dollar strength, with the DXY trading near multi-month highs, and elevated Brent crude prices hovering near $104 per barrel.
However, suspected intervention by the Reserve Bank of India supported the domestic unit at lower levels.
At the interbank foreign exchange market, the rupee opened at 96.71 against the US dollar. In intraday trade, it touched a high of 96.65 and a low of 96.79 against the greenback.
At the end of the trading session on Thursday, the rupee closed at 96.88 (provisional), down 13 paise from its previous close.
On Wednesday, the rupee had closed at 96.75 against the US dollar.
“We expect the rupee to trade with a negative bias on risk aversion in global markets amid escalation of geopolitical tensions. A strong dollar and surge in crude oil prices may also pressurise the rupee.
“However, declining odds of a rate hike by the US Fed in October and any intervention by the RBI may support the rupee at lower levels. Traders may also take cues from weekly unemployment claims data out of the US,” said Anuj Choudhary, Research Analyst, Mirae Asset Sharekhan.
Forex traders said investors will wait for the RBI to take action against speculation on the USD/INR pair, with Governor Sanjay Malhotra assuring that the central bank would help the rupee find its true value, which is currently undervalued.
“We will ensure that the rupee stabilises, that the rupee finds its correct value, and we will support an orderly movement of the rupee in finding its correct value and at the same time in ensuring that there is no excessive volatility,” the RBI Governor said on Wednesday.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading at 102.40, higher by 0.16%.
Brent crude, the global oil benchmark, was trading 4.20% higher at $104.41 per barrel in futures trade amid concerns over disruptions to crude supplies through the Strait of Hormuz.
The resurgence in crude oil prices is largely fuelled by ongoing geopolitical tensions in the Middle East, where attacks on commercial shipping in the Gulf and Strait of Hormuz threaten global supply lines.
On the domestic equity market front, the Sensex tumbled 1,045.46 points to settle at 71,593.24, while the Nifty slumped 371.25 points to 22,231.80.
Foreign Institutional Investors (FIIs) offloaded equities worth ₹6,121.37 crore on a net basis on Wednesday, according to exchange data.