Oil-driven dollar demand to pressure Indian rupee; RBI blunts losses

Business Recorder reported that the Indian rupee is likely to stay weak during Wednesday's trading, as Brent crude moves toward the $90 mark and regional currencies in Asia lose ground. Traders expect the rupee to open between 95.46 and 95.48, following Tuesday's close at 95.4350 against the dollar. Central bank intervention is expected to restrict the currency's decline, although the rupee has been sliding since it broke through the 95 level last week.

Importers have increased their hedging as Brent has climbed 7% this week, and bankers say this dollar buying is weighing on the currency. The Reserve Bank of India has been selling dollars through state-run banks in the two sessions this week, around 95.40 on Tuesday and between 95.25 and 95.30 on Monday. A currency trader at a bank said the RBI is active all day, but rising oil risk is pushing underlying demand through, and expects the central bank to resist any move above 95.50.