MUMBAI: The Indian rupee is likely to dip at the open on Tuesday, weighed down by rising oil prices and a decline in US equity futures after US President Donald Trump called for the evacuation of Tehran.
The non-deliverable forward market indicated a open in the 86.12-86.16 range, versus 86.0650 in the previous session.
The Indian currency traded in a 85.94-86.23 band on Monday, finding support once again near the 86.20 level, which held firm on Friday too.
The 86.20–86.25 range is “proving difficult” to take out for dollar bulls and the probability of it being breached on Tuesday are low, said a currency trader at a Mumbai-based bank.
Indian rupee ends nearly flat following choppy trading; forward premiums dip
While the dollar/rupee pair is expected to open higher, it will likely run into offers “almost immediately”.
Brent crude rose more than 1.5% on Tuesday, while US equity futures declined on concerns over escalations in the Iran-Israel conflict, now in its fifth day. Sentiment was rattled by a report that Trump had asked the national security council to convene in the situation room.
He cut short his visit to the Group of Seven summit in Canada. Earlier, Trump had called for the immediate evacuation of Tehran and reiterated that Iran should have signed a nuclear agreement with the United States.
Some analysts said these events have fuelled speculation that the US could be on the verge of launching military operations in Iran.
This comes after U.S equity markets had rallied and oil prices softened on Monday amid reports that Iran was looking to dial down its conflict with Israel.
“How the US may get involved and how Iran may respond moving forward will certainly be crucial for the path of markets,” MUFG Bank said in a note.
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