Indian rupee set to rally after crude drops on Mideast respite, RBI-led inflows build

MUMBAI: The Indian rupee is set to strengthen at Monday’s open, supported by lower oil prices after US President Donald Trump paused ​strikes on Iran following two weeks of attacks. Additional support is expected ‌from foreign inflows spurred by a series of recent central bank measures, traders said. The Indian rupee is expected to open in the 96. 14-96. 18 range per US dollar, according to traders, having ​settled at 96. 5625 on Friday. Brent crude for September delivery fell 4% ​to $93. 02 after the U. S. and Iran paused strikes following two weeks ⁠of attacks, raising hopes for a diplomatic resolution that could de-escalate the conflict ​and allow shipping through the Strait of Hormuz to resume. Oil prices had surged ​in recent days amid fears of supply disruptions sparked by tit-for-tat attacks involving the United States and Iran. Brent crude climbed to a high of $102 last week. The retreat in ​oil prices will be a major relief for the Indian rupee, considering India’s ​heavy reliance on crude imports. On Friday, the rupee was on the verge of slipping past ‌97 ⁠per dollar, a level that would have taken it to an all-time low. Reserve Bank of India intervention helped lift the rupee, and the pullback in oil is expected to provide further support. Inflows swell The rupee is expected to ​draw further support from ​robust dollar inflows, ⁠which bolster the RBI’s ability to smooth volatility in the currency market. Dollar-mobilisation schemes announced by the RBI in June ​have attracted nearly $32 billion, RBI chief Sanjay Malhotra told ​The Hindu ⁠BusinessLine in an interview published on Monday. The previous official update indicated that the measures had brought in nearly $20 billion through July 17. “The inflows are definitely on the higher ⁠side ​of expectations. Economists and traders will likely have ​to reassess their assumptions on the amount of total inflows that will come in, ” a currency ​trader at a private-sector bank said.

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