The Indian rupee has gained 5 paise to 94.35 against the US dollar on Monday after the latest US-Iran friction had limited impact on fuel prices, investor risk appetite, and other Asian currencies.
The currency was trading in the 94.15-94.92 range during last week’s trading, finding support from lower crude oil prices, although a stronger US dollar and subdued global risk sentiment capped gains.
At the interbank trading exchange rate, the rupee was trading in the 94-95 range and is likely to remain the rupee’s near-term trading band.
A sharp decline in crude oil prices over the past two weeks has improved the outlook for the Indian currency by reducing the country’s import bill, which also reduced dollar demand.
Although experts caution that the relief may prove uncertain and temporary, with some of the global factors like US oil purchases and dollar strength likely to keep the rupee’s gains in check.
Brent crude has slipped to around $72 per barrel, its lowest level in four months, after declining more than 10 per cent over the past week.
The fall follows the resumption of normal tanker movement through the Strait of Hormuz and the improvement in oil supplies from the Gulf.
They also believe the rupee’s immediate challenge remains the strengthening dollar and high-yielding US treasury bonds.
The greenback remains close to a 13-month high after stronger-than-expected US economic data reinforced expectations that the Federal Reserve may not rush to cut interest rates.
Also read: Indian stock market sees mixed opening in early trade
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