Key Takeaways
- The Indian rupee is expected to open in the 94.44-94.50 range on Thursday.
- Traders are closely watching Jio Platforms IPO flows and positioning for direction.
- Oil price pressures remain a key risk to the rupee’s recovery.
Traders in Mumbai expect the Indian rupee to open in the 94.44-94.50 range on Thursday, with the currency expected to continue its eight-session winning streak.
The rupee has been on an upward trend, climbing from around 96.60-96.70 to break past the 94.70 level, a key technical hurdle throughout last week, according to traders.
A series of measures by the Reserve Bank of India, coupled with active intervention and flows related to the Jio Platforms IPO on Wednesday, have contributed to the rupee’s rally, traders noted.
The Jio Platforms IPO saw strong demand on its opening day, led by institutional investors, indicating a significant inflow of funds into the market.
While the currency’s current levels offer importers an attractive opportunity to buy dollars amid high oil prices, traders are cautious about rushing in due to expectations of continued RBI intervention and supportive flows over the next two to three days.
Foreign investors can use sell/buy FX swaps to manage IPO-related flows without directly affecting spot-market dollar supply, but some of these flows do filter through to the spot market, bankers said.
Oil prices rose on Thursday, with attacks by the Houthis in Saudi Arabia prompting the United States to order diplomats and family members to leave its missions in the Kingdom. Brent crude rose 1.5% to inch past $110.50.
Oil price pressures remain a key threat to the rupee’s recovery, and there is a “material” risk of the currency reversing its ongoing rally, a treasury official said.
