The Indian rupee saw a rebound of about 40 paise on March 10, as Brent crude prices eased below $100 per barrel, even as investors were cautious about the escalating conflict in the Middle East.
The local currency was trading at Rs 91.93 per dollar, as compared to Rs 92.35 per dollar in the previous trading session, which happened to be a fresh record low.
US President Donald Trump signalled on Monday that the war in Iran could soon come to an end, but warned of more supply-related risks should any shipment via the Strait of Hormuz be disrupted again. India imports nearly 40 percent of its energy through that passage.
Brent crude prices were trading at near $87 per barrel, after they hit nearly $120 per barrel in the last trading session. Energy markets have been on edge ever since the war broke out between US-Israel, and Iran, with possibilities of an oil supply shock.
As a result, the Indian rupee has depreciated by more than 1.5% so far this month due to conflict.
Domestically, the Reserve Bank of India (RBI) has been steadfast in shoring up the rupee by intervening in the spot and the offshore non-deliverable forwards (NDF) markets, according to market participants. The RBI will look to aggressively sell the dollar to prevent further depreciation beyond the Rs 92 level, traders say.
“Technically, USD/INR has been gradually building higher support levels in recent weeks. For the near term, the 91.40–91.50 region is expected to act as a strong support zone. If momentum continues, the pair may gradually move toward the 92.50-92.80 region in the coming sessions,” Amit Pabari, MD at CR Forex Advisors, said.
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