Indian rupee to resume slide under mounting pressure from oil surge
- The Indian rupee is expected to open in the 96.40-96.45 range, traders said, after inching up 0.2% to close at 96.23 in the previous session
MUMBAI: The Indian rupee is poised to open lower on Wednesday, reversing a brief relief rally, in the wake of a further rise in oil prices following fresh exchanges of strikes between the United States and Iran.
The Indian rupee is expected to open in the 96.40-96.45 range, traders said, after inching up 0.2% to close at 96.23 in the previous session. That marked the Indian currency’s best day in two weeks, buoyed by robust inflows linked to a set of measures announced by the central bank to support the rupee.
Bankers said the Reserve Bank of India’s repeated intervention around the 96.50 level, coupled with expectations that it would step up support as the currency nears its all-time low of 96.96, have provided a cushion for the rupee.
It was “largely position-lightening” that helped the rupee, with the inflow news “providing a semblance of positive sentiment,” a currency trader at a private bank said.
Economists said the inflows would boost India’s foreign exchange reserves and enhance the RBI’s firepower to support the currency.
Oil rally heats up
Brent crude climbed past $92.50 a barrel for the first time in nearly six weeks. Fears of supply disruptions intensified after US forces said they had struck Iranian military targets for an 11th straight night, while Kuwait reported attacks by Iranian drones.
The continued exchange of strikes has heightened concerns over disruptions to energy supplies and further escalation in the region.
For the rupee, the rally in oil prices delivers a double blow, with higher crude costs pushing up U.S. Treasury yields. The 10-year U.S. Treasury yield rose to 4.64% on Tuesday, its highest level in two months.