Indian rupee set to rally after crude drops on Mideast respite, RBI-led inflows build
- The Indian rupee is expected to open in the 96.14-96.18 range per US dollar, according to traders, having settled at 96.5625 on Friday
MUMBAI: The Indian rupee is set to strengthen at Monday’s open, supported by lower oil prices after US President Donald Trump paused strikes on Iran following two weeks of attacks.
Additional support is expected from foreign inflows spurred by a series of recent central bank measures, traders said.
The Indian rupee is expected to open in the 96.14-96.18 range per US dollar, according to traders, having settled at 96.5625 on Friday.
Brent crude for September delivery fell 4% to $93.02 after the U.S. and Iran paused strikes following two weeks of attacks, raising hopes for a diplomatic resolution that could de-escalate the conflict and allow shipping through the Strait of Hormuz to resume.
Oil prices had surged in recent days amid fears of supply disruptions sparked by tit-for-tat attacks involving the United States and Iran. Brent crude climbed to a high of $102 last week.
The retreat in oil prices will be a major relief for the Indian rupee, considering India’s heavy reliance on crude imports.
On Friday, the rupee was on the verge of slipping past 97 per dollar, a level that would have taken it to an all-time low.
Reserve Bank of India intervention helped lift the rupee, and the pullback in oil is expected to provide further support.
Inflows swell
The rupee is expected to draw further support from robust dollar inflows, which bolster the RBI’s ability to smooth volatility in the currency market.
Dollar-mobilisation schemes announced by the RBI in June have attracted nearly $32 billion, RBI chief Sanjay Malhotra told The Hindu BusinessLine in an interview published on Monday.
The previous official update indicated that the measures had brought in nearly $20 billion through July 17.
“The inflows are definitely on the higher side of expectations. Economists and traders will likely have to reassess their assumptions on the amount of total inflows that will come in,” a currency trader at a private-sector bank said.