Indian rupee ends flat as importer dollar bids wipe boost from oil retreat
- The currency ended the session at 93.3725 per dollar
MUMBAI: The Indian rupee closed nearly unchanged on Wednesday, wedged between comfort from a decline in crude oil prices and persistent dollar demand from local importers, including oil marketing companies.
The currency ended the session at 93.3725 per dollar, compared with its previous close of 93.3750.
During the day, the Indian rupee rose to 93.13, before giving up the gains as importers stepped in to lock in hedges, traders said. The price-action was echoed by dollar-Indian rupee far forward premiums which also nudged higher following an early retreat.
Global markets were boosted by the prospect of fresh peace talks between the U.S. and Iran this week. The dollar index hovered near six-week lows as signs that diplomatic engagement would continue in the Middle East helped calm markets.
“Markets have grown more confident that the Middle East crisis is moving toward a resolution … given how unsuccessful the first round of negotiations was last weekend, these dollar levels seem to embed a fair amount of premature optimism,” analysts at ING said in a note.
Indian assets, too, joined the optimistic chorus with the benchmark Nifty 50 up 1.6% while the yield on the country’s 10-year benchmark bond dipped to its lowest level in three weeks.
Meanwhile, data showed that India’s goods trade deficit contracted to $20.67 billion. Economists had expected the trade deficit to be $32.75 billion in March, according to a Reuters poll, compared with a deficit of $27.1 billion in the previous month.
The Middle East war has impeded the country’s exports while also raising the cost of energy and other imports, exerting two-sided pressure on the trade balance.
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