Rupee falls 44 paise to 94.82 as oil spike wipes out Jio-fuelled gain

The rupee fell 44 paise to close at a provisional 94.82 to the US dollar on Thursday, surrendering most of the previous day’s rally as a jump in crude oil and a falling stock market pulled it back.

The currency opened at 94.47 in the interbank market and weakened through the day, touching 94.94 at its lowest. On Wednesday it had climbed 53 paise to 94.38, its strongest close in six weeks, helped by dollars coming in for Jio Platforms’ share sale and by intervention from the Reserve Bank of India.

Oil does the damage

The main pressure came from oil. Brent crude futures rose 3.23% to $112.33 a barrel after attacks by Yemen’s Houthi rebels on energy infrastructure in Saudi Arabia. India buys most of its oil abroad, so every rise in the price adds to demand for dollars.

“Brent crude surged 3 per cent following attacks on Saudi Aramco’s oilfield,” said Sunny Aggrawal, head of fundamental research at SBI Securities.

A softer US currency offered some relief. The dollar index, which measures the greenback against six major currencies, slipped 0.17% to 101.60, and US Treasury yields fell.

Stocks add to the pressure

Indian shares fell for a third straight day. The Sensex lost 460.30 points to 73,249.39 and the Nifty 50 dropped 123.70 points to 22,687.65. Foreign investors, who had bought ₹1,022.32 crore of shares on Wednesday, are watched closely for any return to selling.

Forex traders said dollar supply had improved after the Jio offer and could get further support from hopes of a trade agreement with the United States. They warned, however, that renewed outflows by foreign portfolio investors or a rise in crude towards $120 a barrel could push the rupee lower again.