6 days ago
Rupee Recovers as Easing Brent Prices Offset Dollar Pressure
The Indian rupee traded close to ₹95.40 for one US dollar.
Reports differed slightly about its opening rate, with one saying ₹95.44 and another saying ₹95.50.
The rupee later recovered after oil prices became cheaper.
Iran and Oman are discussing a temporary shipping route through the Strait of Hormuz.
These talks lowered fears that oil supplies would be disrupted for a long time.
The US dollar remained strong because US inflation was still higher than the Federal Reserve wants.
The Reserve Bank of India has also taken steps to bring more foreign currency into India and support the rupee.
Even so, one expert said the rupee could weaken in the coming weeks.
The rupee opened at ₹95.44 according to one report, while another said it opened at ₹95.50 before recovering to ₹95.40.
Easing Brent crude prices helped the rupee recover as Iran-Oman talks reduced fears of a prolonged Strait of Hormuz disruption.
Brent crude was reported between $86.30 and $87.48 per barrel, while the Dollar Index remained near or above 99.
US inflation stayed at 3.7% in July, above the Federal Reserve’s 2% target for the 65th consecutive month.
RBI measures have attracted nearly $73 billion in foreign-exchange inflows, but analysts still expect USD/INR to move toward 96.20–96.50 in coming weeks.
- Who
- The Indian rupee, the Reserve Bank of India, the Federal Reserve, Iran, Oman, and foreign-exchange traders.
- What
- The rupee recovered from early losses and traded around ₹95.40 per US dollar, supported by lower Brent crude prices.
- Where
- The Indian interbank foreign-exchange market, with oil-market developments linked to the Strait of Hormuz.
- When
- Thursday, 27 August; the Indian foreign-exchange market had been closed on Wednesday for Id-e-Milad.
- Why
- Lower oil prices and RBI support helped offset dollar demand, hedging activity, and expectations of possible Federal Reserve tightening.
Factors Supporting the Rupee
Factors Pointing to Rupee Weakness
Near-term exchange-rate direction
Factors Supporting the Rupee
Lower Brent crude prices, RBI intervention, and nearly $73 billion in foreign-exchange inflows could provide short-term support, with 95.15–95.20 identified as a support zone.
Factors Pointing to Rupee Weakness
Continued dollar demand, hedging activity, strong US currency conditions, and possible Federal Reserve tightening could push USD/INR toward 96.20–96.50.
Oil-supply outlook
Factors Supporting the Rupee
Continuing Iran-Oman discussions about a temporary Strait of Hormuz shipping corridor have reduced fears of a prolonged disruption and helped Brent prices ease.
Factors Pointing to Rupee Weakness
No final agreement has been reached, and differences involving Washington and Tehran could threaten a resolution, leaving oil-supply risks unresolved.
RBI foreign-exchange strategy
Factors Supporting the Rupee
The RBI’s June purchase of about $561 million and reduced forward dollar sales suggest it is rebuilding reserves as foreign-currency inflows improve.
Factors Pointing to Rupee Weakness
Analysts still expect broader rupee depreciation despite RBI measures and improved inflows, indicating that central-bank support may not eliminate downward pressure.
Key facts
- Rupee trading level
- ₹95.40 per US dollar in early trade, after reportedly opening between ₹95.44 and ₹95.50.
- Brent crude
- Reported between $86.30 and $87.48 per barrel.
- Dollar Index
- Around 99.14 and above the 99 mark.
- US inflation
- 3.7% in July, above the Federal Reserve’s 2% target for 65 consecutive months.
- RBI June activity
- The RBI purchased approximately $561 million after selling dollars for two consecutive months.
- Foreign-exchange inflows
- RBI measures involving FCNR(B), OFCB, and ECB attracted nearly $73 billion as of 21 August.
- Analyst outlook
- USD/INR has support around 95.15–95.20 but could move toward 96.20–96.50 over coming weeks.
Quotes
Amit Pabari
Managing director of CR Forex Advisors
“The FCNR(B) window remains open until August 31 and should continue to provide near-term support to the rupee. The 95.15–95.20 zone is expected to act as an important support area for USD/INR. However, the broader view continues to favour rupee depreciation, with the pair likely to move towards the 96.20–96.50 zone over the coming weeks.”
deccanchronicle.com
“While global attention remains focused on oil and the dollar, an equally important story is unfolding in India. After selling dollars for two consecutive months to support the rupee, the RBI turned into a net buyer in June, purchasing approximately USD 561 million.”
deccanchronicle.com
Sources
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