MARKET BRIEF: RUPEE DIPS AMID CORPORATE HEDGING & RBI SWAP FOCUS **Wednesday, February 4, 2026** **Overview** The Indian Rupee (INR) weakened on Wednesday, giving up some gains from the previous session's sharp rally. Month-end corporate hedging and caution ahead of the Reserve Bank of India's (RBI) major FX swap auction weighed on the local unit, despite lingering optimism from the recent India-U.S. trade deal. **Market Snapshot** * **Closing Rate:** **90.43** (Provisional) against the U.S. Dollar. * **Daily Movement:** Down by **11 paise** from Tuesday's close of **90.32**. * **Trading Range:** Opened at **90.35**, fluctuating between a high of **90.26** and a low of **90.54**. **Key Drivers** **1. Corporate Dollar Demand** Importers and corporates stepped up dollar purchases to hedge liabilities, limiting the rupee's upside. This demand for hard currency offset the positive sentiment generated by the recent slash in U.S. tariffs on Indian goods (down to **18%**). **2. RBI FX Swap Auction** Market attention is heavily fixed on the RBI's **$10 billion** sell/buy swap auction scheduled for today. Traders are monitoring the demand at this auction to gauge liquidity conditions and the central bank's management of forward premiums. The auction is a key tool for managing domestic liquidity and FX reserves. **3. Oil & Global Cues** Crude oil prices have surged, with Brent futures gaining **1.32%** to trade near **$69.30** per barrel. Higher oil prices typically pressure the rupee as India imports a significant portion of its energy needs. Additionally, weaker-than-expected U.S. Services PMI data has kept investors cautious. **Outlook** Volatility is expected to persist as the market digests the full details of the India-U.S. trade framework. Analysts predict the USD/INR pair to consolidate in the near term. * **Support:** **90.00** * **Resistance:** **90.60** The rupee remains the best-performing Asian currency this week following the trade deal announcement, but "buy-on-dips" behavior from importers continues to cap significant appreciation.