Indian rupee set to slip on oil pressure, relies on RBI support
- The Indian rupee is expected to open in 95.35-95.40 range, per traders, having settled at 95.30 to the dollar on Monday
MUMBAI: The Indian rupee is poised to open weaker on Tuesday, pressured by higher oil prices amid stalled U.S.-Iran peace talks, with traders looking to the Reserve Bank of India to intervene again to limit the currency’s decline.
The Indian rupee is expected to open in 95.35-95.40 range, per traders, having settled at 95.30 to the dollar on Monday.
The currency traded in a 95.10-95.30 range over the last three sessions, with heavy dollar demand around current levels keeping the currency under pressure while RBI’s intervention capped losses.
On Monday, the central bank likely sold dollars near 95.25, but the local currency still slipped, underscoring the pressure from importer hedging and higher oil prices.
RBI has been “consistently” on the offer in dollar/rupee, and without that, the pair would definitely be well past 95.50, a currency trader at a bank said.
“Today will be a similar kind of a day, where the inherent dollar demand will have to be absorbed by the RBI.”
US-Iran impasse
Uncertainty over a U.S.-Iran peace deal and the reopening of the Strait of Hormuz pushed Brent crude 5% higher on Monday.
The oil market remains highly choppy, hinging on news flow around any signs of progress on a peace deal that could lead to the reopening of the key strait.
U.S. President Donald Trump on Monday responded to Iran’s list of demands with his own conditions for a peace deal.
Brent added to Monday’s rally in Asia trading, inching towards the $88 a barrel level. The rise in oil prices pushed U.S. Treasury yields higher, with the 10-year yield climbing to around 4.70%, reversing the decline triggered by softer U.S. jobs data.