The pace of June outflows has already nearly matched May’s total, weighing on the domestic currency.
Market participants said concerns over a prolonged conflict in the West Asia and its impact on oil prices remain a key risk for India, a major crude importer.Most Asian currencies weakened and regional equities declined amid renewed uncertainty surrounding the region.
Jateen Trivedi, Vice President Research Analyst – Commodity and Currency at LKP Securities, said that higher crude prices have capped the rupee’s recent recovery and kept market sentiment cautious ahead of the Reserve Bank of India’s monetary policy decision on June 5.He expects the rupee to trade in the 95.25-96.25 range in the near term.
A recent Piramal Finance report cautioned that a combination of rising crude oil prices and a weakening rupee could revive inflationary pressures and external sector risks if sustained over a prolonged period.
Meanwhile, Asian shares retreated on Thursday (June 4) following declines on Wall Street that snapped a nine-day winning streak for the S&P 500.
Oil prices fell back after surging Wednesday (June 3) as renewed fighting threatened the US-Iran ceasefire.
Early Thursday in Asia, Brent crude was $1.17 lower at $96.64 per barrel, while benchmark US crude oil shed $1.08 to $94.94 per barrel. Oil prices had climbed a day earlier after both the United States and Iran said they launched retaliations for earlier attacks or attempted ones.
–With Reuters inputsALSO READ | From investor onboarding to overseas investments: SEBI updates AIF rulebook
