Indian rupee weakens in NDF, set to slide past 93 as oil surges

MUMBAI: The Indian rupee fell sharply in the non-deliverable forward market (NDF) on Thursday after attacks on key Gulf energy facilities heightened economic risks for energy-importing countries globally.

The 1-month USD/INR NDF was quoted at about 93.70 to the dollar, indicating the rupee will slip to a lifetime low past the 93 per dollar mark when onshore spot trading resumes on Friday.

The spot rupee had fallen to a low of 92.63 on Thursday and traders reckon that steeper losses are in store for the currency unless the central bank intervenes.

Oil prices rose after Iran attacked several Middle East energy facilities following a strike on its South Pars gas field, in a major escalation in the US-Israeli war.

Brent crude oil futures were up over 4% at $112.2 per barrel as of 11:00 a.m. IST.

The war has disrupted shipments through the Strait of Hormuz, prompting the Indian government to assess fuel-supply requests from its neighbours and prioritise domestic requirements.

“India’s external balances are highly levered to energy imports and remittances from the Middle East,” Goldman Sachs analysts said in a note.

The rupee, among currencies of energy importers that have been relatively resilient due to central bank action despite underlying vulnerabilities, could see further pressure if the conflict is prolonged, they added.

The firm expects the currency to weaken to 95 over the next 12 months.

India’s benchmark Nifty 50 index fell 2% on Thursday, tracking losses in Asian stocks, while the local debt and FX markets were shut for a holiday.