The Indian rupee has rebounded to 91.80 against the dollar on Tuesday, recovering from its record low of 92.33 as crude oil prices eased. The oil prices retraced to $91.50 per barrel after touching a high of nearly $120 as President Donald Trump hinting at ending the war earlier.
The rupee’s gains on Tuesday positioned it as the fourth-best performing Asian currency, following by Thai baht, Philippine peso, and Malaysian ringgit. The year-to-date depreciation in the current financial year has fallen o 7.42% from 8.04% earlier.
“The ease in oil prices has given slight comfort to the market. The pressure on the rupee still remains due to significantly higher oil prices compared to earlier levels. Without a substantial reversal in oil, meaningful appreciation looks difficult,” said a dealer at a foreign bank. He added that oil prices dipping below $75 should stabilise the rupee.
What do dealers forecast?
The dealer expect the currency to trade at 92-92.5 by March-end. Though the rupee rebounded from the low levels, depreciation bias continue for the currency, said dealers.
During the day, the rupee traded in the range of 91.74-92.19. The Reserve Bank of India (RBI) has intervened in the market through its dollar sales after the rupee went to a low of 92.19 during intra-day, said dealers.
“The rupee opened higher due to fall in crude oil prices. However, the continuous equity outflows and demand from importers pushed the rupee lower, after which the RBI defended the currency above the 92 level,” said Anil Kumar Bhansali, head of treasury at Finrex Treasury Advisors LLP.
What do traders and currency analysts say?
Traders and currency analysts said that holding current rupee levels will depend on crude oil prices, which they expect to drive the currency in the near term.
“I expect the rupee to trade in the range of 91.5-92.5 in the near-term, with any upward movement depending on the RBI intervention,” said Bhansali.
