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Rupee holds steady as lower oil prices support USD/INR outlook
USD/INR was around 95.12 after rebounding from a monthly low of 94.83, with expectations easing around Strait of Hormuz navigation risks.
The Indian rupee was trading nearly flat against the US dollar on Thursday, with USD/INR around 95.12 after rebounding from the fresh monthly low of 94.83 seen the previous day, according to FXStreet.
Support for the rupee is tied to lower oil prices, as expectations grow that navigation through the Strait of Hormuz, a key chokepoint for about one-fifth of global energy supply, will normalize. FXStreet notes that Iran and Oman are close to finalizing a framework to manage passage, and a senior Gulf official cited a 50% chance of an agreement by Friday, while Iran indicated reopening depends on Washington ending a naval blockade on Iranian sea ports.
FXStreet also points to ongoing risks from Yemen’s Houthis, whose attacks on Saudi Arabian tankers using the Red Sea route are expected to keep energy supply concerns on investors’ radar.
In the background, the Reserve Bank of India kept its repo rate unchanged at 5.25% and reduced its inflation forecast for the current year to 5%, while warning that core price pressures could rise to 5.9% in the third quarter. FXStreet adds that traders are awaiting the US nonfarm payrolls report for July, due Friday, as a key market catalyst.