Mumbai: The Indian rupee weakened by 21 paise against the US dollar in early trading on Monday, November 2, as a stronger American currency pressured the domestic unit. However, declining crude oil prices and gains in Indian stock markets helped limit losses. The rupee opened at 94.90 in the interbank foreign exchange market before weakening to 94.97 against the US dollar. It had closed at 94.76 on Friday.

Dollar Pressure

The US dollar continued to strengthen against major global currencies, putting pressure on emerging-market currencies, including the Indian rupee. The dollar index, which measures the greenback against six major currencies, rose 0.07 per cent to 101.94. Forex traders said the rupee remained vulnerable to global currency movements despite supportive domestic factors.

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Rupee Outlook

Anindya Banerjee, Head of Commodity and Currency Research at Kotak NEO, expects the USD-INR exchange rate to remain between 94.40 and 95.60. He said Reserve Bank of India (RBI) measures and market operations have helped control excessive currency volatility. According to Banerjee, softer crude oil prices could support the rupee, while renewed oil price increases might push the dollar-rupee pair towards the upper end of its expected range.

Crude Relief

International benchmark Brent crude declined 3.07 per cent to $109.95 per barrel in futures trading. Lower oil prices generally benefit India, which depends heavily on imported crude, by reducing pressure on import payments.

Forex Reserves

Meanwhile, India's foreign exchange reserves declined by $1.269 billion to $719.748 billion during the week ended October 30, according to RBI data. The previous reported week had witnessed a $5.011 billion decline in reserves.

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Market Support

Domestic equities opened strongly, providing some support to the rupee. The Sensex surged 764.72 points to 75,216.80, while the Nifty climbed 201.40 points to 23,255.90. Foreign institutional investors also purchased Indian equities worth ₹3,598.54 crore on Friday, according to exchange data.