Rupee Opens Higher Against U.S. Dollar As Most Asian Currencies Advance

The Indian rupee opened with modest gains against the U.S. dollar on Thursday, even as rising geopolitical tensions in the Middle East kept global oil prices elevated. The domestic currency strengthened at the opening, while most Asian currencies also traded in positive territory against the dollar.

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The rupee opened at 96.49 against the U.S. dollar, compared with its previous close of 96.57. Currency markets remained focused on the impact of the rising crude price and developments surrounding the U.S.-Iran conflict.

Crude Price Keeps Currency Markets on Edge

According to Finrex, the rupee is expected to open around 96.50 against the U.S. dollar as the crude price climbed close to $96 per barrel. The brokerage said geopolitical tensions intensified after fresh U.S. strikes on Iran, while Yemen’s Houthi rebels claimed attacks on Saudi oil tankers in the Red Sea, raising concerns over global oil supplies.

Finrex noted that the rupee continues to trade close to its record closing low of 96.96. A sustained increase in the crude price could add further pressure on the domestic currency because of India’s dependence on imported crude oil.

The brokerage also said the Reserve Bank of India (RBI) could intervene if required to limit excessive volatility in the foreign exchange market. It added that exporters may consider selling dollars during intraday rallies, while importers could utilise any decline in the U.S. currency to meet their requirements.

Asian Currencies Trade Mostly Higher

Most Asian currencies traded with gains against the U.S. dollar during the session. The South Korean won emerged as the strongest performer, rising 0.406%, followed by the Taiwan dollar, which advanced 0.182%.

The Singapore dollar increased by 0.054%, and the Japanese yen was up by 0.043%. However, the Philippine peso and Thai baht were virtually unchanged at 0.006% and 0.003%, respectively.

The Indonesian rupiah fell by 0.162%, and thus it became the weakest currency in the region. The Chinese renminbi slipped 0.106%, while the Malaysian ringgit was nearly unchanged with a marginal decline of 0.005%.

Dollar Holds Firm on Safe-Haven Demand

The USD saw a fairly flat performance as market participants continue to evaluate geopolitical news. Renewed tensions between the U.S. and Iran supported demand for the greenback, while the Japanese yen continued to trade near a 40-year low against the dollar despite recording modest gains during the session.

Currency markets are expected to remain sensitive to movements in the crude price, geopolitical developments and any signals from central banks. In the case of the rupee, movements in the price of international crude, foreign portfolio investments and RBI activity are expected to drive trading for the time being.