The rupee opened sharply higher by 37 paise at 94.30 against the US dollar on Thursday, 25 June, supported by a steep decline in crude oil prices, which have now fallen below levels seen before the Iran conflict.
The domestic currency had come close to breaching the 95-per-dollar mark in the previous session before reversing course, aided by likely intervention from the Reserve Bank of India (RBI). Comments from RBI Governor Sanjay Malhotra also helped ease pressure on forward premiums.
Despite continued weakness across most Asian currencies amid strong safe-haven demand for the US dollar and expectations of higher US interest rates, the rupee managed to outperform its regional peers.
According to a Reuters report, traders expect the rupee’s resilience to continue, even as the dollar index remains near multi-month highs and most Asian currencies extend their losses.
Market participants attributed the rupee’s rebound to a combination of RBI intervention and the sharp correction in crude oil prices. Brent crude fell more than 4% on Wednesday and extended losses by another 2% in Asian trading, slipping to $72.28 per barrel as stranded oil tankers resumed movement through the Strait of Hormuz following an initial agreement aimed at ending the US-Israel conflict with Iran.
(more to come)