is expected
to open weaker on Friday after a rally in the previous session
was spurred by likely intervention, with
traders doubtful that the support can last without relief from
oil prices.
The 1-month non-deliverable forward indicates the rupee
will open in the 91.64 to 91.68 range versus the U.S.
dollar, having settled at 0.6 per cent higher at 91.60 on Thursday.
The previous session’s rally in the rupee ran counter to the
underlying trend, with traders pointing to a familiar RBI
playbook of aggressive dollar sales before the local market
opens.
Most bankers doubt the recovery will prove durable, noting
that similar RBI-driven moves in the past have tended to fade.
Without a shift in key drivers—particularly softer oil
prices—the currency’s underlying bias is still seen tilted
toward weakness, they said.
“These kind of interventions change the tone temporarily.
They usually do not alter the broader trend without the support
of other factors,” a currency trader at a bank said.
“Right now, oil is the key variable for the rupee and across
assets. Without relief there, the rupee will remain under
pressure.”
Oil prices have surged this week on worries that the
escalating Iran war could severely disrupt supplies.
Traders say the market has been highly volatile, remaining
highly sensitive to conflict-related headlines and to
developments affecting shipping through the Strait of Hormuz.
Brent crude pushed past $86 a barrel for the first time in
just under two years before dipping back to around $84. A senior
White House official said the U.S. Treasury Department may take
action in the oil futures market to combat rising energy prices.
For the week, Brent is up about 16 per cent.
Meanwhile, risk sentiment remained tentative after U.S.
equities dipped on Thursday. The dollar index hovered near the
99 handle, while Asian currencies were mixed.