Rupee traders weigh Jio IPO flows against oil price risks

MUMBAI — The Indian rupee may open at 94.44-94.50 against the US dollar on Thursday, as traders weigh Jio Platforms IPO inflows against the risk posed by soaring oil prices, according to market sources. The currency has been on an eight-day winning streak, gaining ground from around 96.60-96.70 earlier this week. A combination of Reserve Bank of India measures, active intervention, and Jio IPO flows have lifted the rupee to its highest level since mid-September.

The rupee breached the 94.70 mark on Wednesday, shattering a key technical barrier all week, which could prompt additional selling of long-dollar positions, a bank official stated. Although the present levels present merchants with a beneficial moment to acquire dollars amidst high oil prices, anticipations of ongoing RBI intervention and supportive flows over the upcoming two to three days might deter them from rushing into the currency, the official added.

Jio Platforms' IPO attracted significant demand on its debut trading day on Wednesday, driven by institutional investors. While overseas investors can employ sell/buy foreign exchange swaps to manage IPO-related flows without directly influencing the spot market's dollar supply, some of these flows may still seep into the spot market, bank officials noted.

The looming threat of oil price pressures, with Brent crude surging 1.5% to just under $110.50 following fresh Houthi attacks in Saudi Arabia, casts a shadow over the rupee's recovery prospects, with material risk of a reversal in the ongoing rally, a treasury official warned.