Rupee to benefit from dollar retreat, plunging US yields; oil surge tempers impact
The rupee is expected to open flat to marginally higher, per traders, having settled at 95.26 to the dollar on Thursday
The Indian rupee is expected to open flat to marginally higher on Friday, supported by a retreat in the dollar and a plunge in US Treasury yields. However, the currency may face pressure from a surge in oil prices. On Thursday, the rupee settled at 95.26 to the dollar. A retreat in the dollar and a decline in US yields pushed investors towards US Treasuries, with the two-year yield falling by 8 basis points to its lowest level in seven weeks.
The 10-year Treasury yield also dropped to 4.90%, down 46 basis points from its recent peak. Despite the safe-haven demand, the dollar index fell to 101.70 due to the decline in US yields. Asian currencies remained relatively stable, while US equity indexes fell on Thursday, with futures pointing to further losses due to disappointing earnings from major technology companies.
Concerns over supply disruptions following Yemen's Iran-aligned Houthis' increased attacks on Saudi Arabia further added to the risk-averse mood in Asia. Brent crude prices surged to $117.84 a barrel. The rupee's support from the decline in US yields may be limited, as it is primarily driven by a flight to safety. However, the rise in oil prices could more than offset this relief.
The ability of the rupee to find support will again depend on the Reserve Bank of India's intervention.
Written by urgent.news from Hindu BusinessLine's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
