Indian rupee inflow-linked, RBI-backed optimism faces oil test
MUMBAI: The Indian rupee’s rally, propelled by the central bank’s dollar sales and bolstered by hefty inflows from one-off measures, will face a familiar foe on Friday in rising oil prices. The rupee is expected to open in the 94.55 to 94.60 range, per traders, having settled at 94.4850 to the dollar on Thursday, when the currency rallied 0.5%, taking its rally for the week to a percentage point. Asia’s second-best performing currency after the Korean won this week, the rupee has managed to climb to its highest level in two months despite a surge in oil prices that has pushed up US Treasury yields and increased expectations that the Federal Reserve will raise rates this month. The currency has found support from more forceful Reserve Bank of India intervention, complemented on Thursday by the RBI’s update on the inflows mobilised through its special schemes. Inflows linked to the schemes topped $136 billion, blowing past market expectations and providing a powerful tailwind for the rupee. The combined force of outsized inflows and the RBI now showing willingness to use its expanded firepower more aggressively has the potential to change near-term perceptions of the rupee
