Indian rupee likely to stay under pressure as NDF maturities, outflows offset oil relief

MUMBAI: The Indian rupee may struggle on Wednesday despite a pullback in oil prices, with near-term pressures from non-deliverable forward ​maturities and portfolio outflows expected to dominate, bankers said.

The 1-month ‌NDF indicated the rupee will open in a 93.88 to 93.92 range versus the US dollar, after closing at 93.8650 on Tuesday.

Brent crude fell about 6% to ​below $100 a barrel on reports of a US ceasefire proposal ​to Iran.

US President Donald Trump said on Tuesday the US ⁠was making progress in negotiations for halting the war with ​Iran, while a source confirmed that Washington had sent Iran a 15-point settlement ​proposal.

Oil prices have been highly volatile, reacting sharply to headlines around Iran and shifting signals on negotiations. Prices have seesawed, rallying on escalation risks and witnessing equally ​steep pullbacks on reports about negotiations.

“It has been a relentless news ​cycle over the past 12 hours, and that intensity is expected to continue ‌through ⁠the week,” said Chris Weston, head of research at Melbourne-based broker Pepperstone.

Maturities, outflows to weigh on Rupee

While the rupee is typically highly sensitive to oil prices, Wednesday’s session is likely to be driven more by ​upcoming maturities across ​onshore, NDF and ⁠futures markets, bankers said.

They noted that with the spot date marking the last day of India’s fiscal ​year, maturities that generate dollar demand could keep the ​rupee ⁠under pressure despite relief from lower oil.

A currency trader at a private sector bank said the rupee continues to face pressure from sustained equity ⁠outflows, ​averaging roughly $1 billion per day in recent ​sessions.

“Daily dollar demand from oil and equity flows is keeping it (dollar/rupee) well supported, with little ​room for dips,” he said.