The Indian rupee experienced minimal fluctuations on Tuesday, barely changing against the U.S. dollar. This stability can be attributed to a decline in U.S. Treasury yields and concerns surrounding elevated crude oil prices in the wake of the Middle East conflict.
Closing slightly stronger at 83.2450 against the U.S. dollar compared to the previous session’s close at 83.2625, the Indian rupee remained range-bound throughout the day, fluctuating within a slim range of 83.2275 to 83.26.
October has seen the rupee confined to a narrow trading band as traders anticipate potential interventions from the Reserve Bank of India (RBI) if the currency approaches record lows. Srinivas Puni, Managing Director at QuantArt Market Solutions, expects this range-bound behavior to persist for a few more days.
The key factors influencing the rupee’s performance include the Israel conflict and the 10-year U.S. Treasury yield, as highlighted by Puni.
Oil prices, which surged on Monday due to military confrontations between Israel and the Palestinian Islamist group Hamas, remained relatively stable. The Brent crude oil contract settled at $88.12 per barrel after registering its most significant gain since April, rising by more than 4%.
U.S. Treasuries experienced a decline as Federal Reserve officials suggested that additional rate hikes might not be necessary. Investors are now closely monitoring the U.S. inflation data, scheduled for Thursday, to gain insights into the future of interest rates.
A forex dealer at a private bank commented that significant movements in the rupee are unlikely until the U.S. inflation figures are revealed, expressing hope for more substantial market developments after the release.
In summary, the Indian rupee held steady in a narrow range amidst global uncertainties, including fluctuating oil prices, declining U.S. Treasury yields, and anticipation of U.S. inflation data. These factors are expected to play a pivotal role in shaping the rupee’s future performance