Rupee began the week on a weaker note, slipping 10 paise to 95.28 against the US dollar in early trade. The decline came as a stronger US dollar overseas and uncertainty over global developments kept market sentiment under pressure.Rupee opened at 95.25 against the US dollar in the interbank foreign exchange market on Monday before weakening to 95.28, down 10 paise from Friday’s close of 95.18. With the fall, rupee erased part of the 17-paise gain it had recorded in the previous session.Forex traders said that the Reserve Bank of India is expected to use any fresh foreign inflows to replenish the country’s foreign exchange reserves rather than allowing the rupee to appreciate sharply.Markets also remained cautious amid uncertainty surrounding the progress of US-Iran peace talks, with geopolitical risks continuing to influence investor sentiment.According to CR Forex Advisors MD Amit Pabari, the rupee’s inability to strengthen despite favourable global cues points to underlying weakness.“The message from last week is simple. When the rupee cannot rally on good news like falling oil and a softer dollar, it tells you the underlying mood is fragile. Any fresh negative trigger could push USDINR towards the 95.80 to 96.00 zone, while support holds near 94.80 to 95.00,” he said.The dollar index, which tracks the US currency against six major peers, was trading 0.10% higher at 100.95.Pabari added that while weak US jobs data had kept pressure on the dollar index, the rupee had failed to benefit from the softer greenback.“The dollar index eased to around 100.90 as weak US jobs data continued to weigh on it. Normally, a softer dollar is exactly what the rupee needs to catch a breath. This time, it simply did not happen, and that is the part worth watching closely this week,” he said.Brent crude futures, the global benchmark for oil prices, were down 0.58% at $71.70 a barrel.Meanwhile, Dalal Street began the week on a strong note, with the benchmark indices rising over 0.4% in early trade. The BSE Sensex climbed 316.46 points, or 0.41%, to 78,080.37, while the NSE Nifty advanced 99.60 points, or 0.41%, to 24,381.00. Exchange data showed foreign institutional investors remained net buyers on Friday, purchasing equities worth Rs 1,355.33 crore.Separately, the Reserve Bank of India said the country’s foreign exchange reserves declined by $5.654 billion to $666.933 billion in the week ended June 26. This followed an increase of $963 million in the previous reporting week, when reserves had risen to $672.587 billion.The reserves had earlier reached a record high of $728.494 billion in the week ended February 27. They later declined over several weeks after the onset of the Middle East conflict, which put pressure on rupee and led the RBI to intervene in the foreign exchange market through dollar sales.
