Indian rupee faces pressure from stubbornly high oil, weak Asian peers

MUMBAI: The Indian rupee is set to slip at Tuesday’s open, with oil prices near a three‑week high and a ​weaker tone across Asian currencies.

The Indian rupee is expected to open ‌in the 94.25-94.30 range, according to traders, having settled marginally higher at 94.19 on Monday.

The currency has steadily weakened from the high of around 92.70 hit ​10 days ago, with oil-linked flows and hedging-related dollar demand ​chipping away at the positive sentiment created by the Reserve ⁠Bank of India’s measures to support the rupee.

Oil appears to have ​settled at a higher level, leaving limited scope for sustained relief ​for the rupee, a currency trader at a private-sector bank said.

On a day-to-day basis, there is heavy dollar buying by oil refiners, with little offsetting supply expected ​and limited RBI intervention anticipated.

The RBI has been intervening to alleviate ​pressure on the rupee, traders said.

However, the support has largely been selective, with the ‌central ⁠bank supplying dollars up to specific levels before stepping back, rather than defending the currency aggressively, they said.

Oil remains a pain point

It has been two months since the U.S. and Israel attacked Iran, and while ​a ceasefire has ​remained in ⁠place since early April, oil flows through the Strait of Hormuz have yet to resume.

Analysts see the lack ​of shipments through the key transit route as ​a major ⁠obstacle to any cooling in oil prices.

Brent crude for June climbed more than 1% to $109.40 a barrel on Tuesday, potentially extending its winning streak ⁠to ​seven sessions. Faltering efforts to halt the U.S.–Iran ​conflict underpinned prices.

Most Asian currencies weakened, compounding the pressure from oil prices on the rupee. ​The dollar index inched up.