Indian rupee battles oil, hedging drag; RBI shield, weak dollar cushion fall

Business Recorder reported that the Indian rupee was expected to weaken on Friday, pressured by higher crude oil prices and steady dollar purchases from importers seeking to hedge their foreign currency exposure. Traders, however, expected the Reserve Bank of India's continuing intervention and a broadly softer dollar to limit losses. The rupee was projected to open between 95.74 and 95.78 per dollar, after settling at 95.7050 on Thursday.

The currency has moved within a narrow band of 30 paisa this week, mirroring the pattern of the previous week. Daily declines have been driven by oil and importer hedging, but have tended to stall once the central bank steps in. A weaker dollar, linked to a US Treasury move to support longer-dated bonds, has also aided the RBI's efforts.

Dollar weakness is largely seen as temporary, since longer-dated US Treasuries sold off again on Thursday, undoing an earlier rally that followed the plan to double buybacks next quarter. Brent crude stood slightly under $94 a barrel on Friday, having gained more than 2% in the prior session and nearly 12% over two weeks. Supply worries remain elevated as the outcome of the conflict involving the United States, Israel and Iran is still unclear.