Rupee traders weigh Jio IPO flows against oil price risks
- The Indian rupee is expected to open in 94.44-94.50 range, per traders, after settling at 94.46 to the dollar on Wednesday
The Indian rupee is strengthening due to Jio Platforms IPO inflows and RBI intervention, reaching a multi-month high. However, rising oil prices pose a significant risk to its ongoing rally.
- Jio Platforms IPO inflows strengthening the Indian rupee.
- RBI intervention and unwinding of dollar positions supporting the rally.
- Rising global oil prices posing a significant threat to the rupee.
MUMBAI: The Indian rupee is likely to open flat on Thursday, with traders looking to Jio Platforms IPO flows and positioning for direction while oil prices remain a risk.
The Indian rupee is expected to open in 94.44-94.50 range, per traders, after settling at 94.46 to the dollar on Wednesday.
The currency is on an eight-session winning streak, climbing from around 96.60-96.70.
A series of measures by the Reserve Bank of India coupled with active intervention and flows related to the Jio Platforms IPO on Wednesday have lifted the currency to its highest level since the first week of September.
The unwinding of positions, particularly in the non-deliverable forward market, has further fuelled the rupee’s rally, traders said.
The rupee on Wednesday broke past the 94.70 level, which had acted as a key technical hurdle throughout last week. The break could prompt further unwinding of long-dollar positions, a treasury official at a bank said.
While the currency’s current levels offer importers an attractive opportunity to buy dollars amid high oil prices, expectations of continued RBI intervention and supportive flows over the next two to three days could make them cautious about rushing in, he said.
The Jio Platforms IPO saw strong demand on its opening day on Wednesday, led by institutional investors. While foreign investors can use sell/buy FX swaps to manage IPO-related flows without directly affecting spot-market dollar supply, some of these flows do filter through to the spot market, bankers said.
Oil price pressures
Oil prices rose on Thursday with more attacks by the Houthis in Saudi Arabia prompting the United States to order diplomats and family members to leave its missions in the Kingdom. Brent crude rose 1.5% to inch past $110.50.
Oil remains a key threat to the rupee’s recovery, and there is “material” risk of the currency reversing its ongoing rally, the treasury official said.