Rupee at 94.75: Dollar strength and RBI reserve strategy

The rupee opened at 94.75 on Wednesday, down 19 paise from Tuesday's close, with the dollar index holding above 101. The greenback traded at 101.34, up 0.15%, keeping pressure on emerging-market currencies.

Forex traders said the central bank is likely to use any fresh foreign inflows to rebuild its reserve position rather than let the rupee strengthen. That pattern has been consistent in recent sessions, they added.

"The global dollar is also adding pressure. After the US Federal Reserve maintained a cautious stance in its latest policy meeting, the Dollar Index has continued to hold above the 101 mark," CR Forex Advisors MD Amit Pabari said.

Crude oil prices edged higher to $73.23 a barrel. Anil Kumar Bhansali, head of treasury at Finrex Treasury Advisors, said continued normalisation of oil flows through the Strait of Hormuz after the US-Iran ceasefire kept prices on the lower side, though uncertainty over the peace talks kept a risk premium in play.

On the domestic side, foreign institutional investors sold a net Rs 2,556.75 crore in equities on Tuesday, exchange data showed. India's fiscal deficit reached 9.6% of the FY27 budget target at the end of May, according to the Controller General of Accounts.

"As long as the dollar stays firm globally, the rupee is likely to remain under pressure," Pabari said.