The Indian rupee opened 6 paise higher at 94.89 against the US dollar, holding near a two-month high despite headwinds from rising crude oil prices and elevated US Treasury yields.

Two factors supported the currency in early trade, according to the report: intervention by the Reserve Bank of India (RBI) and dollar selling by foreign banks.

The resilience comes even as broader Asian equity markets fell, with a surge in crude oil prices lifting US bond yields to their highest level since 2008 — a dynamic that typically pressures emerging-market currencies such as the rupee by making dollar-denominated assets more attractive.

India imports the bulk of its crude oil requirements, so higher global oil prices tend to widen the country's trade deficit and increase demand for dollars, putting downward pressure on the rupee. Conversely, rising US Treasury yields often draw capital flows toward dollar assets, weighing on Asian currencies.

The rupee trades in a managed float, with the RBI routinely intervening in the foreign exchange market — buying or selling dollars — to curb excessive volatility rather than target a specific exchange rate level. This framework has been tested repeatedly during past episodes of global risk-off flows, when the central bank has drawn on its record foreign exchange reserves to smooth depreciation pressure.

The rupee's level near 94.89 per dollar marks its strongest range in roughly two months, aided by the central bank's presence in the market and dollar supply from foreign banks.

Traders and analysts typically watch the interplay of crude oil prices, US yield movements, and foreign portfolio flows into Indian equities and debt as key near-term drivers of the currency's direction, alongside any signals on the RBI's policy stance from the Monetary Policy Committee.

Source: CNCTV18