Indian rupee set to slip on oil pressure, relies on RBI support

MUMBAI: The Indian rupee is poised to open weaker on Tuesday, pressured by higher oil prices amid stalled U.S.-Iran ​peace talks, with traders looking to the Reserve Bank of ‌India to intervene again to limit the currency’s decline.

The Indian rupee is expected to open in 95.35-95.40 range, per traders, having settled at 95.30 to the dollar ​on Monday.

The currency traded in a 95.10-95.30 range over ​the last three sessions, with heavy dollar demand around current ⁠levels keeping the currency under pressure while RBI’s intervention capped ​losses.

On Monday, the central bank likely sold dollars near 95.25, but the ​local currency still slipped, underscoring the pressure from importer hedging and higher oil prices.

RBI has been “consistently” on the offer in dollar/rupee, and without that, the pair ​would definitely be well past 95.50, a currency trader at a ​bank said.

“Today will be a similar kind of a day, where the inherent ‌dollar ⁠demand will have to be absorbed by the RBI.”

US-Iran impasse

Uncertainty over a U.S.-Iran peace deal and the reopening of the Strait of Hormuz pushed Brent crude 5% higher on Monday.

The oil market remains highly ​choppy, hinging on ​news flow around ⁠any signs of progress on a peace deal that could lead to the reopening of the ​key strait.

U.S. President Donald Trump on Monday responded to ​Iran’s list ⁠of demands with his own conditions for a peace deal.

Brent added to Monday’s rally in Asia trading, inching towards the $88 a barrel level. ⁠The ​rise in oil prices pushed U.S. Treasury ​yields higher, with the 10-year yield climbing to around 4.70%, reversing the decline triggered ​by softer U.S. jobs data.