US yields, dollar amplify oil-driven pressure on Indian rupee
The Indian rupee, which has been sliding to new lows in recent sessions, is expected to remain under pressure on Friday, with rising U.S. Treasury yields boosting the dollar and compounding the already significant strain from high crude oil prices.
The rupee is expected to open in the 95.80–95.90 range, traders say, after settling at 95.7625 per dollar on Thursday.
The currency has declined to new lows over three straight sessions, losing 1.36% this week, with the downside likely moderated by Reserve Bank of India intervention to manage the pace of the decline, according to bankers.
It hit a lifetime low of 95.9575 per dollar in Thursday trading before paring some losses.
Multiple reports in recent days outlining possible steps to boost dollar inflows and alleviate mounting pressure on the rupee have offered only temporary relief, before the currency resumed its downward trend.
Equity outflows, persistent dollar demand from oil marketing companies and other importers, as well as subdued exporter interest in selling dollars continue to weigh on the rupee.
Brent crude is holding near $107, underscoring sustained strength in oil prices, keeping the rupee outlook weak. India imports around 90% of its requirements for the key commodity.
Oil markets are eyeing updates on the meeting between U.S. President Donald Trump and Chinese President Xi Jinping.
Meanwhile, the U.S. 10-year yield climbed above 4.50% to a near one-year high, lifting the dollar and adding to pressure on the rupee.
Bets that the Federal Reserve may need to raise interest rates to tackle oil-driven inflation have pushed Treasury yields higher. The dollar index moved past 99, while Asian currencies and equities declined.
"It could very well be that US yields open up a new leg higher (for USD/INR)," a currency trader at a bank said.
Lastly, Indian state-run fuel retailers have raised petrol and diesel prices for the first time in four years by 3 rupees per liter, according to retailers in Delhi.
($1 = 95.76 Indian rupees)
(1 Indian rupee = $0.0104)
