The Indian rupee is poised to weaken at Monday’s open, with the market’s focus swinging back
to oil after Iran expanded strikes on Gulf states following U.S.
attacks, reviving risks to India’s trade balance.
The rupee is expected to open in the 95.55-95.60 range
against the U.S. dollar on Monday, traders said, after settling
at 95.3250 on Friday.
For the local currency, the focus has swung back to crude
oil prices after hostilities between the United States and Iran
re-escalated, with U.S. President Donald Trump saying the
ceasefire is over.
The rupee traded in a 94.96-95.60 range last week, largely
mirroring moves in crude oil, for which India relies heavily on
imports to meet its requirement. Traders expect that
relationship to persist this week with markets assessing the
implications of the latest Middle East strikes and
counter-strikes on energy supplies.
Beyond the focus on oil, market participants are watching
how the Reserve Bank of India responds, a currency trader at a
private-sector bank said.
Bankers said the RBI has been providing its usual support to
the rupee, and the extent of intervention could become more
pronounced due to the potential impact from rising oil prices.
The private-sector bank trader added that he is monitoring
the impact of oil-driven inflation concerns on U.S. Treasury
yields.
OIL JUMPS
Brent crude jumped more than 4% to $79.28 a barrel in Asian
trading.
Over the weekend, Tehran expanded its attacks to Qatar and
the United Arab Emirates, while the United States launched fresh
hits on Iran, in the latest part of a cycle of attacks and
counter-attacks tied to shipping through the Strait of Hormuz.
Trump said on Sunday that the Strait remained open to
commercial traffic. Earlier, Iran had indicated the strait had
been shut.
“The latest exchange of strikes has raised fresh doubts
about the prospects for a lasting agreement, despite continuing
diplomatic contacts,” ANZ Bank said in a note.
(Reporting by Nimesh Vora; Editing by Ronojoy Mazumdar)