Rupee Weakens With Asian Currencies; Ceasefire Doubts, Oil Volatility Weigh

Mumbai, April 9: The Indian rupee opened on a weaker note on Thursday, tracking losses across Asian currencies, as lingering uncertainty over the durability of a ceasefire between the US and Iran kept risk appetite in check and added to the overhang from recent forex market curbs by the Reserve Bank of India.

The domestic currency started the session at 92.66 per dollar, compared with the previous close of 92.59, reflecting cautious sentiment among traders amid global geopolitical tensions and regulatory developments at home.

Asian Currencies Decline

Weakness in the rupee was in line with broader moves across Asia. The Indonesian rupiah and Philippine peso led regional losses, declining 0.4 per cent each, while the South Korean won fell 0.2 per cent. The Malaysian ringgit and Taiwan dollar slipped 0.16 per cent each, the Japanese yen declined 0.1 per cent, and the Chinese renminbi edged lower by 0.05 per cent, highlighting a broader risk-off tone in emerging market currencies.

The pressure also came despite a marginal pullback in the dollar index, which measures the strength of the US currency against a basket of major peers. The index was last at 99.04, down 0.10 per cent from its previous close of 99.13. However, the dollar continued to remain elevated overall, supported by expectations that the Federal Reserve may keep interest rates higher for longer amid persistent inflation concerns.

Ceasefire Uncertain

Market participants said that uncertainty surrounding the US-Iran ceasefire has kept oil prices volatile, which in turn is weighing on the rupee. As a major importer of crude, India’s currency tends to weaken when oil prices rise, due to higher demand for dollars from refiners and a widening current account deficit.

Adding to the pressure are recent steps by the RBI to tighten oversight in the forex derivatives market. The central bank has been discouraging excessive speculative positioning and tightening rules around offshore non-deliverable forwards (NDFs), moves that have reduced liquidity and contributed to near-term volatility in the currency.

By mid-morning, however, the rupee showed signs of stabilisation. At around 11:35 am, it was trading at 92.65 to the dollar, trimming some of its opening losses as traders assessed incoming cues and possible central bank intervention.

The rupee also posted modest gains against other major currencies. It rose 0.1 per cent against the British pound to 124.15 and edged up 0.029 per cent versus the euro to 108.09. Against the Japanese yen, the rupee gained 0.27 per cent to trade at 0.58.

Analysts expect the rupee to remain range-bound in the near term, with key triggers including oil price movements, developments in the Middle East, and signals from global central banks. While domestic fundamentals remain relatively stable, external headwinds are likely to dictate direction, keeping traders cautious and volatility elevated.

Source:

• https://in.tradingview.com/markets/currencies/