Indian rupee inflow-linked, RBI-backed optimism faces oil test

Business Recorder reported that the Indian rupee is expected to open in a 94.55 to 94.60 range against the dollar on Friday, after settling at 94.4850 on Thursday. The currency gained 0.5 per cent that day, lifting its weekly rally to a full percentage point and reaching a two-month peak. Traders credited the move to firmer Reserve Bank of India dollar sales and large inflows from one-off measures.

Inflows tied to the special schemes exceeded $136 billion, beating market expectations, according to the central bank's Thursday update. A bank-based currency trader said the combination of these inflows and more aggressive intervention could alter near-term views on the rupee. However, he warned that oil prices could make it hard for the currency to hold its gains unless crude cools meaningfully.

Crude oil climbed toward its steepest weekly gain since mid-July, driven by escalating tensions and fresh US-Iran hostilities, with Brent trading above $96 a barrel in Asia. A broad weakening of the dollar, led by a sharp rise in the Japanese yen, should also support the rupee as traders bet on a Bank of Japan rate increase. Markets are now waiting for US payrolls figures for signals on the Federal Reserve's policy path.