Indian rupee falls on oil concerns, but doesn't weaken past support level
Last updated on: 03 April,2023 01:25 pm
A rise in oil prices impacts the rupee directly in form of a higher import bill
MUMBAI (Reuters) - The Indian rupee dropped against the US dollar on Monday following an output cut by OPEC+, while managing to remain above a near-term support level. The rupee was at 82.4075 to the dollar by 10:34 a.m. IST, down from 82.1650 in the previous session.
“(On USD/INR) nowadays, minor support and resistance levels are important, considering how range-bound it is,” a trader at a private sector bank said.
“The 82.50 (level) is important from the psychological point of view. The last time it reached here, it (the pair) faced good offers.”
The rupee, mirroring its Asian peers, struggled after a production cut of around 1.16 million barrels per day was announced by Saudi Arabia and other OPEC+ oil producers. Oil prices jumped with Brent crude futures at one point up more than 8%.
A rise in oil prices impacts the rupee directly in form of a higher import bill and indirectly in terms of inflation.
“Surprise cut is consistent with the new OPEC+ doctrine to act pre-emptively because they can without significant losses in market share,” Goldman Sachs said in a note. It raised its forecasts from Brent crude by $5 to $100 for December this year.
The Reserve Bank of India’s policy decision due Thursday and the US jobs report scheduled for the following day are seen key for the rupee.
The RBI is expected to raise rates by 25 basis points, while the US data is projected to show 238,000 job additions.
The US jobs data comes on the back of lessening worries over the banking sector, meaning inflation and how the economic data pans out are now likely to be the main drivers of the Federal Reserve’s decisions on interest rates.