The Indian rupee opened lower against the US Dollar on Friday, May 22. The Indian currency opened at 96.26 per dollar, compared to Thursday’s close of 96.20/$. This comes to pass as Brent Crude remains around the $105. In addition, the US Dollar index also dipped marginally, dropping to 99.25.After snapping the losing streak on Thursday, the currency has fallen again.
The rupee will have to contend with weakness in most Asian peers while drawing a measure of support from the pullback in oil.
“It remains unclear whether a breakthrough is imminent,” MUFG Bank said in a note, while noting that tentative optimism around a potential agreement was supporting risk sentiment, Reuters reported.US markets rose on Thursday, with futures hinting the upward momentum could extend.
Since India is a significant importer of petroleum, lower oil prices usually help the rupee since they relieve pressure on the nation’s trade balance and inflation forecast.The rupee’s recovery coincided with a drop in US bond yields as worries about inflation and potential rate increases by the Federal Reserve subsided in tandem with the drop in oil prices. On Wednesday, May 20, the benchmark 10-year US Treasury yield had fallen by over 10 basis points to less than 4.60%.However, as importers continued to purchase dollars on dips, market insiders warned that the rupee’s gains would stay limited.Investors kept an eye on events in West Asia, especially the negotiations between the United States and Iran.As for the Indian markets, they are trading higher in the opening hours, with the Nifty jumping 100 points and the Nifty bank index outperforming the rest with a 500-point jump.Coming to the Iran war, US President Donald Trump said discussions were in the final stages while warning of further attacks if an agreement were not reached, thereby keeping everyone on their toes.Also Read: Central Bank of India shares fall 6% after OFS for non-retail opens today; Details here
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