The Indian rupee is expected to open firmer in the 94.25-94.30 range as Brent crude slides below pre-Iran war levels, with RBI intervention supporting the currency against broad Asia weakness, Reuters reports in an opinion piece, passing along the gist of it here.
Summary:
- The Indian rupee is expected to open in the 94.25-94.30 range on Thursday, firmer than Wednesday's settlement of 94.6650, aided by falling oil prices and likely Reserve Bank of India intervention, per Reuters opinion
- Brent crude fell more than 4% on Wednesday and dropped a further 2% in Asian trading to $72.28, falling below levels seen before the US-Iran conflict began on February 28 and leaving the contract down more than 10% for the week and over 21% for the month, per Reuters
- Price action suggests markets are pricing in a swift normalisation of traffic through the Strait of Hormuz following an initial accord to end the conflict, per ING
- Asian currencies were broadly weaker on Thursday, weighed by expectations of higher US interest rates, with the dollar index holding near 101.50, close to its highest level in more than a year, per Reuters
- Comments from RBI Governor Sanjay Malhotra pulled forward premium levels lower in Wednesday's session, per Reuters
The Indian rupee was poised to advance at Thursday's open, bucking broad weakness across Asian currency markets, as a continued slide in oil prices below pre-Iran war levels and likely central bank support combined to put the currency on a divergent path from its regional peers, according to a Reuters opinion column.
Traders expected the rupee to open in the 94.25-94.30 range after settling at 94.6650 on Wednesday, a session in which the currency had come close to slipping through the 95 level before reversing course. The turnaround was attributed to probable Reserve Bank of India intervention alongside remarks from RBI Governor Sanjay Malhotra that pulled forward premium levels lower.
The rupee's outperformance comes as Brent crude, a key driver of India's import bill and current account dynamics, extended its recent collapse. Brent fell more than 4% on Wednesday and dropped a further 2% in Asian trading to $72.28, slipping below the levels that prevailed before the US-Iran conflict began on February 28. The contract is now down more than 10% for the week and over 21% for the month. ING said in a note that price action points to markets pricing in a swift normalisation of Strait of Hormuz shipping traffic following an initial ceasefire accord. The broader Asian currency complex remained under pressure from dollar strength, with the dollar index holding near 101.50, close to its highest level in more than a year, on bets that a resilient US economy and elevated inflation will push the Federal Reserve toward rate hikes.
Sanjay Malhotra, Governor of the Reserve Bank of India (RBI)
