From The Economic Times · Reuters · · 1m 50s
Oil, foreign flows in focus for rupee; bond traders eye rate-hike bets
Rupee steady as oil prices and foreign flows drive market focus.
In brief
Rupee steady as oil prices and foreign flows drive market focus. Indian rupee steady amid oil price volatility and foreign portfolio flows as bond traders bet on aggressive rate hikes. Originally reported by The Economic Times.
Rupee steady
The Indian rupee is likely to be steady over a holiday-truncated week with oil prices and foreign portfolio flows in focus.
Recent rupee strength
Last week, the rupee posted its best week since March with a 2% gain as the central bank rolled out measures to shore up the local unit.
Rupee support measures
The Reserve Bank of India made it costlier for importers to hedge future current-account payments, raised the cost for banks of buying foreign currency, and opened a dedicated window to supply state-run oil companies with…
Near-term rupee range
Traders see the currency in a 94-95.50 range in the near term as the combined impact of measures, expectations, and market interventions supports the rupee.
Oil prices rise
Brent crude prices touched $110 a barrel for the first time since May on Friday, with jitters about global investments in AI firms expected to ripple through the FX market.
Bond market pressure
Indian government bonds face mild selling pressure as fears of a larger rate hike weigh on investor sentiment, with the benchmark 10-year yield expected to move in the 7.32% to 7.42% range.
Bond yield trend
India's benchmark 10-year bond yield posted its ninth consecutive weekly rise, ending at 7.3789% on Friday, up 8 basis points for the week.
Rate hike expectations
Traders expect the central bank to use rate hikes as a defence mechanism to protect the local currency, with calls for a 50-bps move in December rising after the central bank's commentary.
The takeaway
Indian rupee steady amid oil price volatility and foreign portfolio flows as bond traders bet on aggressive rate hikes.
