Rising oil, US yields add to Indain rupee pressure after RBI move

MUMBAI: The Indain rupee is poised to open weaker on Tuesday, with rising oil prices and US bond yields adding to pressure ​on the currency from the central bank bringing forward the ‌deadline for its swap facility for deposits raised from non-resident Indians.

The Indain rupee is expected to open in the 95.68 to 95.72 range, traders said, after settling ​at 95.6025 to the dollar on Monday.

Brent crude climbed past ​the $91-a-barrel mark, while the 30-year US Treasury yield rose ⁠to its highest in more than two decades.

A US-Iran truce expired, and ​Tehran said it would shift to a “fully offensive” military posture, driving oil ​prices higher. The rise in crude, in turn, contributed to the increase in U.S. Treasury yields.

US President Donald Trump told a Fox News reporter that Iran ​should surrender.

The pressure from oil and US yields comes after the ​rupee weakened following the Reserve Bank of India’s decision to shorten the foreign-currency deposit ‌swap ⁠window by one month to August 31.

The RBI’s move, which took most bankers by surprise, led the rupee to weaken past the 95.50 level on Monday despite broad dollar weakness.

Central bank intervention failed to prevent ​the rupee from ​extending its decline.

The ⁠rupee was already facing a “challenging” outlook, and the RBI’s decision has made the picture considerably weaker, a ​currency trader at a private sector bank said.

With oil ​prices now ⁠well above $90 per barrel, the currency faces significantly larger downside risks from here, he said.

Asian cues were largely negative for the rupee, with oil-sensitive ⁠currencies dipping. ​Risk appetite was dented by rising US ​yields, which are moving higher despite markets increasingly expecting that the Federal Reserve will not ​hike interest rates next month.