Mumbai

The rupee recovered from early weakness to end 14 paise stronger at 95.27 against the US dollar on Wednesday, aided by easing crude oil prices, a softer dollar index and suspected intervention by the Reserve Bank of India (RBI) to contain volatility in the foreign exchange market.

Currency dealers said the domestic unit managed to reverse its initial losses as global factors turned favourable later in the session. The RBI is also believed to have stepped into the market to prevent any sharp depreciation in the rupee.

In the interbank foreign exchange market, the rupee opened at 95.52 against the greenback. During the day's trade, it touched a high of 95.07 and slipped to an intraday low of 95.56 before settling provisionally at 95.27. The closing level represented a gain of 14 paise over Tuesday's finish of 95.41.

On the previous trading day, the rupee had strengthened by 20 paise.

The US dollar index, which tracks the American currency against a basket of six major peers, edged down 0.04 per cent to 99.87.

Meanwhile, Brent crude futures, the benchmark for global oil prices, eased 0.32 per cent to USD 91.16 per barrel, offering some relief to import-dependent economies such as India.

Forex market participants said investors remained cautious ahead of the release of the US Consumer Price Index (CPI) data, while geopolitical tensions in West Asia continued to influence sentiment.

According to traders, the rupee remains vulnerable to fluctuations in crude oil prices, given India's substantial dependence on imported energy. Higher oil prices tend to widen the country's trade deficit and put pressure on the domestic currency.

Market concerns intensified after the United States reportedly carried out retaliatory strikes on Iran following the downing of an American Apache helicopter near the Strait of Hormuz. Iran's Islamic Revolutionary Guard Corps (IRGC) subsequently responded with drone and long-range missile attacks targeting US installations in the region.

In the domestic equity market, the benchmark BSE Sensex ended 64.42 points higher at 73,983.18. However, the NSE Nifty slipped 27.15 points to settle at 23,214.95.

Foreign institutional investors (FIIs) remained net sellers in the equity market, offloading shares worth Rs 4,566.03 crore on Tuesday, according to exchange data.

At the same time, government bond yields have softened considerably in recent sessions. The benchmark 10-year government bond yield has declined by nearly 0.10 percentage point over the past four trading days, supported by robust foreign portfolio investment in debt instruments.

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Experts attributed the decline in yields to foreign inflows of Rs 11,026.33 crore into government securities under the Fully Accessible Route (FAR) during the last four sessions. The FAR framework permits overseas investors to invest in designated Government of India securities without being subject to investment caps.