The rupee opened 6 paise lower at 95.28 against the US dollar on Friday, 7 August, as a sharp rebound in crude oil prices weighed on sentiment and strengthened expectations that the US Federal Reserve could maintain a hawkish stance.
Market participants are also awaiting the US July jobs report, due later in the day, for fresh clues on the health of the labour market and the Fed’s interest rate trajectory.
Brent crude surged around 4% on Thursday and extended gains by another 1% in Asian trade, trading near $84 a barrel amid renewed concerns over shipping through the Strait of Hormuz.
Investor worries intensified after Iran, in coordination with Oman, proposed restricting vessels deemed hostile from transiting the strategic waterway and imposing substantial penalties on those violating the proposed rules.
Oil prices have remained the primary driver of the rupee in recent months, while the Reserve Bank of India’s (RBI) policy measures and foreign exchange market interventions have also played a crucial role in shaping the currency’s movement.
The rupee had recently strengthened beyond the 95-per-dollar level, supported by Brent crude falling below $80 a barrel and RBI dollar sales. However, with geopolitical tensions pushing oil prices higher once again, traders told Reuters that the rupee’s near-term direction will largely depend on the extent of RBI intervention in the currency market.
