The Indian rupee is likely to climb at the open on Thursday, aided by a continued drop in oil prices below pre-Iran war levels, while Asian peers were under pressure from safe-haven dollar demand.
The rupee is expected to open in the 94.25-94.30 range, per traders, having settled at 94.6650 on Wednesday.
The currency had been at risk of slipping past the 95 mark in the previous session before reversing course, supported by likely central bank intervention, while comments from Reserve Bank of India chief Sanjay Malhotra pulled forward premium levels lower.
In Wednesday’s session, the rupee had brushed aside the pressure seen across Asian peers, which were weighed down by expectations of higher US interest rates.
That trend is likely to persist in Thursday’s session, traders said, with most regional currencies extending losses, while the dollar index holds near multi-month highs.
Wednesday’s price action has compounded the impact of a further slide in oil prices, a currency trader at a bank said.
The impact of the RBI intervention and lower oil prices are driving a decent uptick in the rupee at the open, he added.
Brent crude fell more than 4 per cent on Wednesday and dropped another 2 per cent in Asian trading to $72.28, amid stranded tankers exiting the Strait of Hormuz following an initial accord to end the US-Israel conflict with Iran.
Brent has now slipped below levels seen before the conflict broke out on February 28. It is down more than 10 per cent this week and over 21 per cent for the month.
Price action suggests the market is pricing in a swift normalisation of traffic through the Strait of Hormuz, ING said in a note.
Meanwhile, the dollar index was holding near 101.50, hovering near its highest level in over a year, on bets that a resilient US economy and high inflation will prompt the Federal Reserve to raise rates.
