Rupee rises to 94.35 against dollar amid easing crude concerns

The Indian rupee opened at 94.35 against the US dollar on Monday (June 29), compared with Thursday’s (June 25's) close of 94.40, as easing concerns over oil prices supported Asian currencies despite renewed hostilities between the United States and Iran.

The rupee traded within a 94.15–94.92 range last week, supported by softer crude oil prices, although cautious investor sentiment and a firm US dollar limited gains.

Market participants said last week’s movement reinforced expectations that the rupee will remain within the 94–95 band in the near term.

“Attention is back on oil following the renewed escalation between the US and Iran,” a currency trader at a bank said. “Markets will also track broader risk sentiment and the direction of the dollar.”

Brent crude rose 0.6% to $72.44 per barrel after reciprocal strikes between the US and Iran highlighted the fragility of the temporary understanding between the two countries and disrupted shipping activity in the Strait of Hormuz.

However, gains in oil prices remained capped after Axios reported that Washington and Tehran had agreed to halt attacks ahead of a possible meeting in Qatar on Tuesday.

Analysts cautioned that oil markets may not be fully pricing in geopolitical risks.

“There is still substantial risk facing the oil market,” ING Bank said in a note. “The market’s complacency appears unusual and leaves significant upside risk if supply recovery slows or if tensions escalate further.”

Asian currencies traded mixed at the start of the week, with oil-sensitive currencies such as the Indonesian rupiah and the Philippine peso showing limited reaction to the developments.

The dollar index was largely unchanged at 101.32, while US equity futures moved higher.

Investors are also awaiting the US June jobs report later this week. The data comes after the Federal Reserve’s recent hawkish policy stance, which strengthened expectations of additional rate hikes later this year.

-With Reuters inputs