RBI’s bid to lift Indian rupee put to test by oil, US yields

MUMBAI: The Indian rupee is on course to open lower on Wednesday, pressured by a surge in oil prices and rising U. S. ​Treasury yields, threatening to blunt the momentum the currency has ‌built with the central bank’s intervention. The Indian rupee is expected to open in the 95. 02-95. 06 range, according to traders, after settling at 94. 95 to the dollar on Tuesday. The ​currency is on a three-day winning streak after touching a two-month ​high of 94. 80 on Tuesday. The rupee’s rally has come despite ⁠multiple headwinds and has been driven largely by aggressive intervention from ​the Reserve Bank of India, with flow-related dollar selling by foreign banks providing ​additional support, traders said. In recent sessions, the rupee has been among the better-performing Asian currencies. The question now is whether the RBI will step in again and absorb the pressure ​coming from higher oil prices, a currency trader at a bank ​said. At the moment, the central bank is effectively the only meaningful dollar seller in the ‌market, ⁠and without its presence, it is difficult to see the rupee holding on to current levels, he added. The RBI’s intervention comes against the backdrop of a surge in deposits from non-resident Indians, which has strengthened its firepower. ​Inflows under the ​FCNR(B) scheme topped $100 ⁠billion by the Aug. 31 deadline for banks to raise deposits eligible for concessional swaps with the RBI, ​the Financial Express reported. Oil, US yields pressure builds Oil extended its ​rally ⁠in Asian trading, with Brent futures climbing to $95. 50 a barrel after fresh exchanges of strikes between the U. S. and Iran overnight heightened fears of supply disruptions ⁠and ​dashed hopes of a near-term easing in Middle ​East tensions. The spike in crude prices reverberated through bond markets, pushing U. S. Treasury yields to ​their highest levels since late 2023.

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