Delivery deadline? High oil prices will keep the Indian rupee on a slippery slope

Both of these pressures should keep the Indian rupee under pressure this week, analysts warn. Lately, the price of Brent crude oil has remained high due to the Russian-Ukrainian war. The price has been hovering between $100 and $110 over the past few weeks.

At the Indian Interbank Exchange, the Rupee opened at 75.94 against the US Dollar. Last week, the rupiah closed at 75.90 against the greenback. The weakness in the value of the rupee against the US dollar will automatically be reflected in its exchange rate with the UAE dirham, as the currency of the United Arab Emirates is pegged to the dollar.

“The rupee has been under pressure due to rising US bond yields, inflation and high crude oil prices. These circumstances are going to make it difficult for the Indian rupee to appreciate. the rupee is trading between 75.50 and 76.25 next week”. said Sajal Gupta, head of foreign exchange and rates at India-based Edelweiss Securities.

“This week is a relatively shorter week, but market participants will keep an eye on inflation and the industrial production figure to gauge a view on the currency,” said Gaurang Somaiya, Forex analyst and Bullion, based in India Motilal Oswal Financial Services.

“Inflation is expected to remain elevated following the recent rise in energy and food prices. On the other hand, industrial production could grow at a slower pace in January and could weigh more on the currency.”

India’s Central Bureau of Statistics (CSO) is set to release the Industrial Production Index (IPI) and Consumer Price Index (CPI) macroeconomic data points on March 12.

On the other hand, expectations for India Inc’s strong fourth-quarter earnings season should attract new foreign equity-focused funds, which could mitigate any marked weakness in the Indian rupee against the US dollar.

“The dollar index surged last week and it is now trading near the crucial psychological 100 mark,” said Devarsh Vakil, deputy director of retail research, India-based HDFC Securities.

“The Rupee is expected to consolidate next week on improving sentiment for the stock markets. In the near term, USD-INR is expected to trade in a range of 76.20-75.70 with a bias in favor appreciation.”

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