Indian rupee to rise on oil pullback after Trump signals talks; Iran denial clouds outlook

MUMBAI: The Indian rupee is poised to rise at the open on Tuesday, boosted by the dip in oil prices after US President Donald Trump ​hinted at talks about a resolution with Iran, although Tehran’s ‌denial of any talks kept uncertainty high.

The 1-month non-deliverable forward indicated the rupee will open in the 93.50 to 93.60 range versus the US dollar, after settling at 93.9750 in ​the previous session, when it hit an all-time low of 93.98.

Brent ​crude dropped 11% on Monday after Trump said he had ordered ⁠a delay to attacks on Iran’s power plants, adding the US had held ​productive talks with unnamed Iranian officials. U.S. equities advanced, the dollar dropped and ​US Treasury yields declined.

Part of these moves reversed in Asian trading, with Brent recovering nearly 4%. Asian equities rose, though they were well off their highs.

Iran’s denial of talks with ​the US, coupled with a Wall Street Journal report that Saudi Arabia and ​the UAE are inching towards joining the fight against Tehran dented the positive sentiment triggered ‌by ⁠Trump’s remarks.

“From Asia’s perspective, what matters is the physical flow of barrels (via the Strait of Hormuz), and over here time is of essence,” MUFG Bank said in a note.

The 1-month USD/INR had dropped to a low of 93.35 ​immediately after Trump’s remarks, ​which would have ⁠meant that the rupee would have risen past the 93 handle. However, with oil prices marching higher, the 93 ​level looks “out of the question”, a currency trader at a ​Mumbai-based bank ⁠said.

“Basically all markets are chasing headlines and looking at oil,” he said. The rupee is at levels “which look really attractive, however you just do not know ⁠how Iran ​situation will play out and that keeps ​conviction low”.

Indian equities were poised to open higher, according to futures, though they too were well off ​the highs seen after Trump’s remarks.