Indian Rupee Expected to Near 91-Level Amid Ongoing Middle East Tensions

Indian Rupee Continues to Trade Near Record Low

The Indian rupee (INR) continues to face downward pressure, with traders predicting it may breach the Rs 91 per dollar mark on March 2. The rupee ended the previous trading session at Rs 90.9750 to the dollar, within a narrow 10 paise range.

Geopolitical Tensions and Oil Prices

The recent joint attack by the United States and Israel on Iran has escalated global tensions, with Brent crude prices trading at $72-$73 per barrel. As India is a major net importer of Brent crude, higher oil prices will negatively impact the rupee, leading to a higher current account deficit and increased pressure on the local currency.

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Impact on Equities, Bonds, and Currency Markets

Higher oil prices will also put pressure on equities and bonds, as investors seek safe-haven assets. This has led to foreign investor outflows, making the rupee the worst-performing currency among its emerging Asia peers.

Reserve Bank of India Interventions

The Reserve Bank of India (RBI) has been intervening in the spot and offshore NDF markets to manage volatility risk and prevent the rupee from depreciating beyond the Rs 91 per dollar mark. The RBI has $723.06 billion in forex reserves as of February 20.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

Forecast and Outlook

Traders predict that the rupee will touch a new record low of Rs 92 per dollar in the coming days, with possible interventions at different price points. The RBI's efforts to manage volatility risk will be crucial in determining the rupee's performance in the coming week.