Indian rupee to benefit from oil plunge while facing technical resistance, dollar strength

Business Recorder reported that the Indian rupee could start Tuesday stronger, with traders indicating an opening near 94.75-94.78 per dollar, after Monday’s close at 94.90. The move follows an 11% fall in Brent crude on Monday, with the benchmark trading at $104.70 in Asia. Lower oil prices could ease pressure on India’s currency, given the country imports about 90% of its oil needs.

The report says the potential currency gain faces limits from dollar strength, resistance around 94.50-94.70 and weakness in other Asian currencies. Higher oil costs have also been associated with a larger import bill, increased corporate demand for currency hedges and weaker foreign portfolio flows. The Reserve Bank of India has sold dollars and used other measures to manage pressure on the rupee.