Indian Rupee Update

Advisory Bazaar Info Services

The Indian rupee is expected to open on a stronger note on Friday, supported by the US dollar’s sharpest decline in three months and a modest easing in crude oil prices.

Key Highlights

* The rupee is expected to trade in the 95.50–95.55 per US dollar range, compared with Thursday’s close of 95.68.

* The currency has appreciated 0.9% this week, marking its best weekly performance in four months, largely driven by the Reserve Bank of India’s (RBI) active intervention.

* Market participants believe the RBI continues to curb excessive rupee weakness through dollar sales. On Thursday, the central bank was seen selling dollars around the 95.75 level to support the currency.

* The RBI’s intervention has helped the rupee outperform other oil-sensitive Asian currencies, including the Indonesian rupiah and the Philippine peso.

* Ongoing geopolitical tensions between the US and Iran continue to keep crude oil prices volatile. Any sustained rise in oil prices could limit further gains in the rupee.

* A weaker US dollar, following intervention to support the Japanese yen and recent Federal Reserve commentary, has also provided support to the Indian currency.

Market Outlook

The near-term direction of the Indian rupee will depend on movements in crude oil prices, RBI intervention, and the trend in the US Dollar Index.