Indian rupee to rise on Jio IPO inflows, RBI while oil risks cloud outlook

MUMBAI: The Indian rupee is likely to rise on Wednesday, supported by dollar inflows linked to the Jio Platforms IPO and by the ​Reserve Bank of India’s support, though traders remain wary of ‌oil-price risks that could revive pressure on the currency.

The Indian rupee is expected to open between 94.75-94.80, per traders, having settled at 94.9250 to the dollar on Monday. India’s financial ​markets were shut for a holiday on Tuesday.

Jio Platforms’ initial public ​offering opens for subscription on Wednesday – the issue has already drawn ⁠robust institutional interest. Bids for the anchor portion totalled more than ​30 times the shares on offer.

Foreign investors typically use sell/buy swaps to ​manage their dollar flows for IPO allotments, selling dollars for rupees in the spot market and agreeing to buy them back at a later date, usually less than ​a week.

Once shares are allotted, investors can unwind these positions and ​sell dollars outright to fund their investments, leading to dollar supply, traders said.

Apart from the ‌expected ⁠IPO-related inflows, the rupee is likely to draw support from continued dollar sales by the Reserve Bank of India, which has been intervening around the 95-per-dollar level to boost the currency. The rupee is on a ​seven-day winning streak.

“While ​the currency has ⁠momentum, it is finding it increasingly difficult to break past the 94.70 level,” a currency trader at a ​bank said.

Whether IPO-related inflows will provide the impetus for the ​rupee ⁠to break through that level, which it has repeatedly struggled with, is the question, he added.

Oil risks

Oil remains a key vulnerability for the local currency. Oil prices rose ⁠on ​Wednesday on Middle East supply concerns, with traders wary ​of Red Sea shipping risks and threats to oil infrastructure in Saudi Arabia.

Brent crude rose ​1.5% to $110.34.