Indian rupee set to weaken more; oil largely shrugs off Trump ceasefire extension

MUMBAI: The Indian rupee is set to weaken further on Wednesday, pressured by renewed upward bias in oil prices despite US President Donald Trump extending the ceasefire with Iran indefinitely. The rupee is expected to open in the 93. 55–93. 60 range, per traders, after settling at 93. 50 on Tuesday when it slipped 0. 4% after the central bank partially relaxed measures to support the currency. Tuesday’s move knocked out the rupee’s short-term upward bias, a spot FX trader said, adding that oil’s push back toward $100 will make any relief rally difficult and contained. “I don’t think the Reserve Bank of India would want the rupee to test 94 any time soon, ” he said, adding that although the currency was under pressure through Tuesday, dollar selling by state-run banks pointed to active intervention. Brent crude slipped only marginally to $98. 28 in Asia trading, holding on to most of its 8. 5% rally from the past two sessions, with traders largely shrugging off Trump’s decision to extend the ceasefire indefinitely. The move appeared unilateral, and it was not immediately clear whether Iran, or U. S. ally Israel, would agree to extend the truce, which began two weeks back. Trump said he would continue the U. S. Navy’s blockade of Iran’s ports and shore, while the fate of peace talks remains uncertain. “The conflict appears to have moved into a prolonged standoff rather than towards a swift or durable resolution, ” MUFG Bank said in a note. “For markets, this environment implies continued disruption to energy flows through the Strait of Hormuz. “ While oil markets were largely unmoved by U. S. President Donald Trump’s ceasefire extension, risk assets received a modest fillip. U. S. equity futures moved higher, while Asian equities were mixed with no major losses. The dollar index was little changed at 98. 35 and 10-year U. S. Treasury yield were holding near 4. 30%, well within its recent range.

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