Indian rupee may slip on oil, risk-off mood; RBI once again expected to ride to rescue

According to Business Recorder, the Indian rupee looks set to start lower on Wednesday, with traders expecting an opening between 95.75 and 95.80 against the dollar. That compares with 95.68 at Tuesday's close. Weak risk appetite and elevated crude prices are the main pressures, with Brent hovering close to $92 a barrel.

Oil has climbed for four straight sessions because of lingering uncertainty around the Strait of Hormuz. US President Donald Trump stated that no talks with Iran are under way and insisted the waterway is open, although Iran maintains it remains shut to shipping. Higher crude is fuelling inflation worries and pushing US Treasury yields up, with the 30-year yield reaching its loftiest point since 2007.

The rupee was already under strain after the Reserve Bank of India moved up the cutoff for its discounted swap window for deposits from non-resident Indians by a month, dampening near-term sentiment. A private bank currency trader described demand for dollars as very high, while the central bank sells dollars every day to cushion the currency. Market watchers are now focused on whether the RBI steps up intervention if the rupee moves into the 95.80 to 96.00 zone.