Indian rupee finds breathing room on oil pullback, soft dollar; Middle East risks linger

MUMBAI: The Indian rupee is poised to find respite during Friday’s session, aided by dip in oil prices and broad-based ​dollar weakness, although traders cautioned that Middle East war risks continue to ‌lurk in the background. The Indian rupee is tipped to open slightly higher at 95. 32-95. 35 against the U. S. dollar after settling at 95. 3875 on Thursday. The currency has traded ​in a 94. 96-95. 60 range so far this week, coming under ​pressure from renewed exchanges of strikes between the U. S. and ⁠Iran, while drawing support from likely intervention by the Reserve Bank ​of India. The fresh hostilities have revived volatility in oil prices, with Brent ​crude swinging between $71 and $80. 50 a barrel during the week. Brent was last quoted at $76. 34, down about 2% on Thursday after a rally. Oil moving away from the $80 level ​is “naturally” good for the rupee, “ a trader at a private sector ​bank said. India imports most of its requirement of the critical commodity. However, with the fighting ‌continuing, ⁠nervousness around the rupee’s path will persist and the question is whether the conflict “becomes worse” over the weekend, he said. The near-term outlook appears tied largely to developments in the Middle East and their impact on crude ​oil prices, bankers ​said. Iranian armed forces ⁠launched attacks on U. S. military infrastructure in Gulf states on Thursday in response to U. S. strikes on ​Iran’s southern coastal and eastern provinces, a move that ​further strained ⁠a three-week-old ceasefire. The latest escalation in US-Iran military tensions raises fresh risks for the oil market, ING Bank said in a note. Meanwhile, the dollar ⁠weakened ​against major peers as well as Asian ​currencies. A decline in US Treasury yields from recent highs, coupled with resilience in risk-sensitive assets, ​reduced demand for the dollar.

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