Rupee snaps eight-day winning streak as rise in crude offsets inflows | Finance News
The Indian rupee snapped its eight-session winning streak as rising crude oil prices and dollar buying at lower levels offset inflows linked to the Jio Platforms IPO and recent measures by the Reserve Bank of India (RBI), dealers said.
The local currency settled at 94.83 per dollar, against the previous close of 94.47 per dollar.
The rupee strengthened to an intraday high of 94.33 per dollar during early trade, supported by foreign inflows, before surrendering its gains as Brent crude prices rose above $112 per barrel amid escalating tensions in West Asia.
Market participants said state-owned banks were seen buying dollars around the 94.32-per-dollar level, possibly on behalf of oil companies or the RBI to cover its short dollar positions. Dollar demand also remained firm amid weakness in domestic equities and a rise in bond yields.
The yield on the benchmark 10-year government bond settled at 7.46 per cent, the highest since November 3, 2022, against the previous close of 7.44 per cent.
“The pullback suggests that dollar demand emerged at lower levels, with some market participants also booking profits on the rupee’s recent appreciation,” said Dilip Parmar, research analyst at HDFC Securities.
The rupee’s recent recovery has been supported by foreign currency inflows linked to the Jio Platforms IPO and RBI measures to curb dollar demand. However, elevated crude oil prices remain a key risk for the currency, given India’s dependence on imports to meet nearly 90 per cent of its crude oil requirements.
Brent crude was trading 3.3 per cent higher at $112.40 per barrel, while global equities came under pressure amid concerns over the conflict in West Asia. The MSCI All Country World Index was set for its biggest daily decline in two weeks.
Market participants are also tracking US jobs data ahead of next week’s Federal Reserve policy decision for cues on the dollar’s movement.
In the derivatives market, forward premiums eased, with the one-month premium falling to 5.94 per cent and the one-year premium to 4.43 per cent, mainly on account of receiving by the RBI, a market participant said.
“In the near term, the rupee is expected to trade in the 94.50 per dollar-95.25 per dollar range, with support around 94.25 per dollar and resistance at 95.30 per dollar,” said Parmar.
The rupee has appreciated by 1.06 per cent in the current month so far. Since the start of the US-Iran conflict, the rupee has depreciated by 4.06 per cent.
“The rupee has taken support at 94.20 thrice before. The key question is whether it can break below the 94.00 per dollar- 94.20 per dollar zone. A trigger could be Brent crude falling below $105, encouraging exporters who have recently held back from hedging to sell their dollar receivables. This could accelerate rupee appreciation through increased dollar supply,” said Amit Pabari, managing director at CR Forex.
