Author: Nimesh Vora
Mumbai (Reuters) – The Indian rupee will open on Monday with weaker pressure on oil prices and risk-taking sentiment on rising crude prices after Iran's military action.
The non-transferable forward indicates that the currency will open around 86.75-86.80 per dollar, compared to 86.5850 in the previous session.
Oil prices jumped to the highest levels after the U.S. joined Israel to attack Iran’s nuclear facilities over the weekend, and concerns were growing about the potential impact on energy supply. Tehran vowed to defend itself. [O/R]
The attack happened after U.S. President Donald Trump said Friday that the decision would “in the next two weeks.”
Worries about Iran's possible traffic across the Strait of Hormuz, a key channel for about one-fifth of the world's crude oil flow, rising oil prices and weighing risky assets.
Goldman warned that if oil flows through the Strait of Hormuz, a key obstacle to crude oil cargo, reduces half of the time by one month and remains 10% over the next 11 months, Brent could temporarily soar to $110.
Brent Ind had a high of $81.40 and then rerun a portion of the rally.
“Ruby was breathless on Friday, and unfortunately, the rupee had to compete with the US-Iran News,” a currency trader at a bank said.
A forex trader at another bank pointed out that oil prices rose more modest than expected and now focus is shifting to the way Iran chooses to respond.
“While Iran may feel it needs retaliation against the U.S. strike, stopping Hormuz may be too far away,” Ing Bank said in a note.
Key indicators:
** One month's non-transferable Rs forward at 86.90; onshore 1 month's forward at 10.25 paisa
** Dollar Index at 98.92
**Brent crude futures rose 1.8% to $78.4 a barrel
**The U.S. 10-year bill yield is 4.39%
** Foreign investors bought $235.3 million worth of Indian stock on June 19, according to NSDL data
** NSDL data shows foreign investors purchased $34.4 million worth of Indian bonds on June 19
(Reported by Nimesh Vora; Edited by Eileen Soreng)
