The Indian rupee turned sharply higher on Thursday afternoon, tracking a slump in crude prices, with stop-losses on short rupee wagers and dollar sales in the non-deliverable forward market boosting the currency, traders said.
Brent crude fell to $99 per barrel, down 2 per cent on the day and reversing course after touching a peak of $102.5.
The fall sparked gains across Asian currencies including the rupee, which was last at 94.2525 per dollar, up 0.4 per cent on Thursday.
A pullback in oil prices would offer much needed relief for India, the world’s third-largest oil importer, and the rupee.
The surge in crude since the start of the Middle East war has prompted economists to lower rupee forecasts, revise inflation expectations higher, and cut the growth outlook.
Dollar-rupee forward premiums retreated, with the 1-year forward implied yield falling to a three-week low of 2.98 per cent.