Indian rupee to rise on dollar slump, softer oil; RBI support underpins sentiment

MUMBAI: The Indian rupee is poised to strengthen at Friday’s open, boosted by the dollar’s biggest slide in three months ​and a modest pullback in oil prices, while the expectation ‌of continued intervention from the central bank keeps it supported.

The Indian rupee is expected to open in the 95.50 to 95.55 per U.S. dollar range, per traders, having ​settled at 95.68 on Thursday.

The currency, up 0.9% this week, ​is headed for its best showing in four months, helped ⁠by persistent intervention from the Reserve Bank of India. The central ​bank intervened aggressively last Friday and has kept up the support since ​then.

The RBI has made it clear through repeated intervention that it does not want significant rupee weakness from current levels, bankers said.

A trader at a private-sector bank pointed ​to the RBI’s dollar sales around the 95.75 level on Thursday ​as a clear indication of its intent to resist further depreciation.

The rupee has outperformed ‌other ⁠oil-sensitive Asian currencies this week, including the Indonesian rupiah and the Philippine peso, largely due to the RBI’s intervention.

While the intervention has bolstered the near-term outlook, further gains may stay capped unless oil-price risks diminish, ​a trader at ​a private-sector bank ⁠said.

Oil prices have been volatile amid renewed tensions between the U.S. and Iran. Crude prices extended losses in ​Asian trading as investors assessed plans for a ​Saudi Arabia-led ⁠maritime coalition aimed at strengthening security cooperation in the Red Sea.

Dollar tumbles

The rupee is likely to benefit from a weaker dollar, with the U.S. ⁠currency pressured ​by suspected yen-supporting intervention and a steeper ​Treasury yield curve after comments from Federal Reserve Chair Kevin Warsh stoked concerns over the ​Fed’s commitment to tackling inflation.