The Indian Rupee opened weak against the US Dollar on Thursday as the crude oil prices were trading at over five-month high.
The rupee weakened by 6 paise to open at 86.42 against the dollar. The Indian unit settled at 86.36 a dollar on Wednesday.
Oil future prices rose 0.66% to $82.57 a barrel in Asia session, touching the highest level since July 26, according to data on Bloomberg. Crude oil prices rose after data from the Energy Information Administration showed that oil inventories in the US declined more than expected in the world's largest economy.
A rise in crude oil prices increases India's import bills, subsequently pressuring the domestic currency.
However, news of Gaza ceasefire restricted gains in the commodity.
The Indian unit received much awaited relief from the dollar index which continued to decline for three days in a row. The index declined after headline inflation came in line with expectations and core inflation declined in December, 2024.
"The December CPI release came in a touch softer as projected, triggering a surge in risk-on sentiment. 10-year US Treasury yields cooled off sharply. Crude oil prices rise on US crude draw and Russia sanctions. For USDINR, 86.25 acts as a support while 86.60 a resistance," said Kunal Sodhani, vice president, Shinhan Bank.
The US CPI data came after producer price index data fell more than expected in December 2024.
"The upcoming central bank meetings and global political developments are expected to inject volatility into the markets. Nonetheless, the rupee's recent gains signal a strengthening position, instilling confidence among market participants about its resiliency. Given these factors the rupee is likely to trade between 86.20-86.80," said Amit Pabari, managing director, CR Forex Advisor.
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