The rupee is seen opening weaker after Brent crude climbed above $90 a barrel, with renewed U.S.-Iran hostilities and shipping disruptions through the Strait of Hormuz adding pressure.
The Indian rupee is expected to come under renewed pressure at Monday’s open after Brent crude climbed above $90 a barrel as hostilities between the United States and Iran intensified, adding to concerns for India as a major oil importer. Traders expect the rupee to slip past 96.50 per dollar after it settled at 96.28 on Friday, leaving it close to its all-time low of 96.96 touched in May. The currency has fallen 1.7% this month, with the latest bout of weakness driven by the rebound in oil prices. Earlier support from a temporary decline in crude, Reserve Bank of India measures aimed at attracting dollar inflows, and improved foreign inflows into Indian equities has faded as oil resumed its climb. Brent crude rose 2.7% on Monday to cross $90 a barrel for the first time in nearly six weeks, after having fallen to near $70 during optimism over a potential U.S.-Iran peace deal. The conflict escalated over the weekend, with the U.S. carrying out a ninth consecutive night of attacks on Iran while Kuwait and Bahrain reported fresh Iranian strikes. Recent attacks on shipping have disrupted flows through the Strait of Hormuz, prompting ING to warn that a prolonged escalation could bring back wide-scale attacks across the Persian Gulf and that shipping flows have returned to levels seen before the U.S.-Iran Memorandum of Understanding. U.S. Treasury yields rose on Monday, while U.S. equity futures were little changed after Friday’s selloff. Other oil-sensitive Asian currencies, including the Indonesian rupiah and Philippine peso, also weakened.