Indian rupee to navigate US-Iran truce possibility, surging global bond yields

The Indian rupee looked set to stay under pressure on Friday, with traders placing it near 96 per dollar compared with the previous session's close of 95.9550. Investors were weighing a possible truce between Washington and Tehran alongside a sharp climb in global bond yields, which have added to pressure on risk assets. Without central bank intervention, the currency could face deeper losses, according to traders.

According to Business Recorder, citing Reuters, negotiators in New York are discussing a phased exit from the war in which Iran would reopen the Strait of Hormuz while the United States eases its economic blockade. Brent crude was 0.5% lower at $106 a barrel on Friday. Separately, the 30-year US Treasury yield climbed to its highest level since 2004 after several Federal Reserve officials said further rate increases may be needed to contain inflation.

Traders see close to a 70% likelihood of a Fed rate increase in October, according to CME's FedWatch tool, while the dollar index has climbed almost 2% this month. ANZ, in a note, expects the Reserve Bank of India to let the rupee depreciate in an orderly way, forecasting 96.50 by December and 98.30 by the end of next year.