Rupee opens 3 paise higher at 92.42 against the dollar, crude a worry

Indian Rupee

The rupee opened tad stronger against the dollar on March 16 after slipping to a new low in the previous session, even as Brent crude remained stubbornly above $100 a barrel with the Iran war entering its third week.

The rupee was trading at Rs 92.42 against the dollar after ending the previous session at Rs 92.45. In the week gone by, the rupee sank to new lows a number of times, with the worst decline of Rs 92.48 in the previous session.

The benchmark Brent crude was trading at nearly $106 a barrel, up nearly 40 percent since the war broke out on February 28.

Sentiment remains fragile globally, as the United States-Israel war on Iran continues to rage. The Strait of Hormuz, a key route through which 20 percent of global energy supplies move, continues to be disrupted.

Two India-bound liquefied petroleum gas tankers flagged passed through the Strait safely, easing immediate supply disruption concerns. The vital shipping route accounts for more than 40 percent of India’s crude and almost 80 percent of the gas supplies.

The Reserve Bank of India’s aggressive market interventions to stem the fall in the rupee are weighing on India’s forex reserves.

According to the latest data from the central bank, reserves fell to $716.81 billion for the week ended March 6, down from $728.49 billion the previous week."

Traders and analysts expect the rupee to slide toward the 93 mark by the end of March, as the economic fallout from the war persists. If oil prices don’t retreat in the near term, the RBI may allow the currency to depreciate, they said.

“The rupee is expected to react negatively to the economic fallout of the war, and the level of Rs 93 by the end of March is more a reality. RBI will continue to sell dollars, but so will the pressure be from FPIs, oil companies and others in buying dollars,” analysts from Finrex Treasury Advisors said.