Indian rupee set to rally as crude dives on Israel-Iran de-escalation
MUMBAI: The Indian rupee is poised to climb at open on Tuesday as the plunge in crude oil on fading Middle East geopolitical risks improves the outlook for the South Asian nation's trade balance and assets.
The 1-month non-deliverable forward indicated an open in the 86.10 to 86.15 range, versus 86.75 in the previous session.
Brent prices fell 2% in Asia after U.S. President Donald Trump said Iran and Israel had agreed to a ceasefire. Brent had already slid 7% on Monday when Iran made a token retaliation against a U.S. base.
'With Trump having lent a hand in brokering a peaceful resolution, the prospect of a prolonged conflict with U.S. involvement has been re-priced,' clearing the way to add risk, Chris Weston, head of research at broker Pepperstone, said.
Indian Rupee weakens alongside Asian peers, oil pullback cushions losses
U.S. equities rose Monday and futures indicated a further rally.
The dollar index softened and Asian equities and currencies advanced.
'It is expected that the big opening dip (on USD/INR) will run into buy orders. I do not think 86 will be taken out, though I reckon that positions are on the lighter side and interbank will be on the hunt to put in shorts,' a currency trader at a Mumbai-based bank said.
Brent crude is now trading below $70 a barrel — near levels seen before Israel's first strike on Iran. The rupee was at 85.60 prior to that escalation.
There is 'definitely' more room for the rupee to rally, a treasury official at a bank said. It's just that large drops on USD/INR tend to 'struggle to hold on'.
Meanwhile, Federal Reserve vice-chair Michelle Bowman said the first interest rate cut this year could come as soon as July, further undermining the dollar and boosting risk.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Express Tribune
9 hours ago
- Express Tribune
'Gas price hike will hit exports'
Listen to article Chairman Businessmen Group (BMG) Zubair Motiwala and Karachi Chamber of Commerce and Industry (KCCI) President Muhammad Jawed Bilwani have strongly opposed the proposed gas tariff hike for industrial processes, calling it illogical and damaging for Pakistan's already struggling industrial sector. The proposal is expected to be discussed in the upcoming meeting of the Economic Coordination Committee (ECC). In a joint statement, Motiwala and Bilwani said the hike is unjustified in light of current global and domestic energy trends. They noted that Brent crude prices have declined and that the SNGPL system is already facing a surplus of imported RLNG, with 300 to 400mmcfd going unutilised due to high prices and excessive taxes. They argued that the government should focus on improving supply management instead of further burdening industry. They emphasised that although only 80 to 100 Independent Power Producers (IPPs) use process gas, more than 8,000 Small and Medium Enterprises (SMEs) rely on it. A tariff increase would cripple these SMEs, which form the backbone of Pakistan's manufacturing sector. Instead, they recommended a 20% reduction in gas tariffs to help SMEs stay afloat amid rising input costs and harsh budgetary taxes. The leaders highlighted that OGRA's recent decision on May 20, 2025, reduced SSGC's gas tariff by Rs103.95 per MMBtu to Rs1,658.56, reflecting falling global fuel prices. They questioned how a hike for industrial users could be justified when regulatory bodies themselves recognised falling costs. OGRA also set a revised tariff of Rs1,895.25 per MMBtu for SNGPL, which remains below the proposed rate. Petitioners during OGRA's hearings also flagged inflated RLNG diversion costs and unrealistic Brent crude pricing assumptions that distort true gas pricing. Motiwala and Bilwani warned that raising gas tariffs would worsen inflation, increase unemployment, and discourage local and foreign investment. Industry, already hit by electricity costs, currency instability, and shrinking demand, cannot absorb further shocks. They called on the ECC to immediately withdraw the proposal and conduct a transparent review of gas pricing, aligning it with OGRA's findings and global trends. "Burdening industry to offset inefficiencies elsewhere is unacceptable," they said. "Support for industry is essential for true economic recovery."
Business Recorder
9 hours ago
- Business Recorder
Iranian oil imports to China hit record high in June
SINGAPORE: China's Iranian oil imports surged in June as shipments accelerated before the recent conflict in the region and demand from independent refineries improved, analysts said. The world's top oil importer and biggest buyer of Iranian crude brought in more than 1.8 million barrels per day (bpd) from June 1-20, according to ship-tracker Vortexa, a record high based on the firm's data. Kpler's data put the month-to-date average of China's Iranian oil and condensate imports at 1.46 million bpd as of June 27, up from one million bpd in May. The rising imports are fuelled in part by the accelerated discharge of high volumes of Iranian oil on the water after export loadings from Iran reached a multi-year high of 1.83 million bpd in May, Kpler data showed. It typically takes at least one month for Iranian oil to reach Chinese ports. Robust loadings in May and early June mean China's Iran imports are poised to remain elevated, Kpler and Vortexa analysts said. Independent Chinese 'teapot' refineries, the main buyers of Iranian oil, also showed strong demand for the discount barrels as their stockpiles depleted, said Xu Muyu, Kpler's senior analyst. A possible relaxing of US President Donald Trump's policy on Iranian oil sanctions could further bolster Chinese buying, she added.
Business Recorder
9 hours ago
- Business Recorder
Asian currencies: Taiwan dollar hits 3-year high
BENGALURU: The Taiwan dollar jumped to a more than three-year high on Friday on a weaker greenback, while other emerging Asian currencies were steady and equities mixed as investors exercised caution ahead of looming US tariff deadlines. Taiwan's currency hit its strongest level since early-April 2022 at 28.919 per US dollar, bucking the broader trend. Traders attributed the currency's ascent to expectations of Federal Reserve rate cuts, a weaker US dollar, and the continued flow of foreign capital into the island. The currencies of other developing Asian nations were largely steady. The Thai baht slipped 0.1% and the South Korean won dropped 0.5% but logged its best week since June 2. The Philippine peso was up 0.2%. The dollar inched lower against a basket of currencies, as markets priced in deeper US rate cuts. Speculation that President Donald Trump could name a more dovish successor to Fed Chair Jerome Powell also added to the expectations. Investors will closely watch the US Personal Consumption Expenditures (PCE) index data - the Fed's preferred inflation gauge - due later in the day, for rate cues. 'Combination of the 'sell USD' trade, consistent stronger Chinese yuan fix seen over the last few sessions and geopolitical continue to fuel the rally in Asia excluding Japan,' OCBC currency strategist Christopher Wong said. Equities in emerging Asia were mixed as investors turned their attention to progress in trade talks ahead of the July 9 deadline for Trump's reciprocal tariffs.
