Rupee set to open near record low as oil prices climb; RBI decision awaited
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The Indian rupee is likely to kick off Friday's session near its all-time low as crude oil prices extended their rise on heightened geopolitical tensions and potential supply risks.
Non-deliverable forwards indicate the rupee will open at around 83.45-83.46 to the U.S. dollar compared with its close of 83.4375 in the previous session. The rupee hit a record low of 83.4550 on Thursday.
Brent crude oil futures rose above $90 per barrel for the first time since October on Thursday and were last up 0.4% at $90.98 following reports of growing tensions between Israel and Iran.
Geopolitical tensions have spurred some risk-off sentiment globally which may hurt the rupee, a foreign exchange trader at a private bank said.
The dollar index was slightly higher at 104.32 and Asian currencies declined, with the Korean won down 0.4% and leading losses.
The rupee may fall below the 83.50 mark today "if the RBI doesn't intervene or if it does mild intervention as it has been over the last few days," the trader added.
Investors will also be keeping an eye on the Reserve Bank of India's (RBI) monetary policy decision due at 10:00 a.m. IST on Friday.
The central bank is widely expected to keep rates unchanged, for a seventh consecutive meeting, according to a Reuters poll of economists.
"We maintain our call for the (RBI) rate cut cycle to start at the tail end of 2024, with a cautious central bank's tone to be rupee-supportive in the near term," DBS Bank said in a note.
Meanwhile, U.S. Federal Reserve officials struck a cautious tone on Thursday, with Minneapolis Fed President Neel Kashkari stating that if inflation continues to stall, no rate cuts may be required this year.
KEY INDICATORS:
** One-month non-deliverable rupee forward at 83.54; onshore one-month forward premium at 7.75 paisa
** Dollar index at 104.3
** Brent crude futures up 0.4% at $9.98 per barrel
** Ten-year U.S. note yield at 4.31%
** As per NSDL data, foreign investors sold a net $150.4 million worth of Indian shares on April 3
** NSDL data shows foreign investors sold a net $438 million worth of Indian bonds on April 3
