The rupee, which closed at 92.04 to the dollar on Wednesday, recovered due to what traders described as soft interventions by the central bank.
The rupee had earlier closed at 91.80/$1, LSEG data showed.
Kunal Sudhani, head of treasury at Shinhan Bank of India, said, “The market tone today was bullish on the dollar, mainly due to oil-linked dollar demand. Additionally, there were foreign investor withdrawals from West Asian tensions and geopolitical risk premium.”
“Many companies are seen increasing their hedges due to geopolitical uncertainty and oil volatility,” Soudhani said.
Indian stocks, which started on a relatively strong note in the morning, sold off across the board at most counters, except for energy assets in the latter half of the day. The Nifty again fell below the 24,000 level, losing nearly 400 points, or over 1.6%, to 23,866 points.
Indian stocks have shown their vulnerability to an energy shortage caused by the West Asian war, prompting a continued sell-off of local stocks by foreign investors and a slide in the rupee, which has weakened in the two weeks since the conflict began. Uncertainty over the transit of oil through the Strait of Hormuz, and the resulting volatility in crude oil prices, have kept traders on edge. Market participants have refrained from taking speculative positions at this stage, given the lack of clarity on the currency’s near-term direction.
The rupee is expected to trade between 91.50/$1 and 92.25/$1 on Thursday.
Brent crude oil was around $93 per barrel, up from $90 per barrel yesterday. The dollar index was also slightly higher at 99. Foreign portfolio investors sold Rs 6,267.3 crore on Wednesday, and Rs 4,672.6 crore on Tuesday, BSE data showed.
