Rupee set to jump after oil sinks on Iran-US breakthrough hopes
- The Indian rupee is expected to open in the 95.25 to 95.30 range to the dollar, per traders, after settling at 95.76 on Thursday
MUMBAI: The Indian rupee is set to climb at open on Friday, buoyed by a retreat in crude prices after U.S. President Donald Trump signalled that a deal with Iran is imminent, a development that could soften a persistent pressure point for the currency.
The Indian rupee is expected to open in the 95.25 to 95.30 range to the dollar, per traders, after settling at 95.76 on Thursday.
Brent crude fell to $88.80, its lowest in two months, after Trump said a peace deal with Iran could be signed as soon as this weekend, just hours after threatening further strikes.
Trump said talks with Tehran had reached the highest levels of Iran’s leadership and had the backing of a broad coalition of regional powers.
Asian equities rallied, U.S. Treasury yields and the dollar dropped.
Investors, however, may be reluctant to chase the optimism too far. Trump has previously talked up prospects of a deal with Iran, only for those hopes to fade without an agreement.
Tehran’s remarks that no final decision has been made are likely to keep the enthusiasm in check.
“Obviously, the key is the message coming out of Tehran,” ING Bank said in a note.
“Therefore, we would be cautious about assuming that the extension of the ceasefire is a done deal.”
A deal would be a major reprieve for the rupee, which has been weighed down for months by high oil prices.
The Reserve Bank of India has responded with a string of steps to attract dollar inflows and support the currency. While those measures provided relief, the currency’s drop on Thursday below levels seen before the RBI actions highlighted the continued pressure.
For the rupee, the real relief will come from a deal that pushes oil durably lower and removes the risk premium embedded in crude, a currency trader at a bank said.