US Pullout From Iran Deal Sends Rupee To Fresh 15-Month Low Vs US Dollar
- Iran, the third-biggest producer among the Organization of the Petroleum Exporting Countries (OPEC), produces about 3.8 million barrels per day (bpd), or about 4.0 per cent of the world's oil supplies.
- Following the US announcement, crude oil prices on Wednesday jumped back to near over 3-year highs. Brent crude futures jumped as much as 2.5 per cent to $76.75.
- Emerging stock, bond markets and currency markets, which have been under pressure even before the US announcement, could be hit further as risk sentiment sours, say analysts.
- Emerging markets have been hit in recent weeks by concerns about capital outflows, as the prospect of higher US interest rates attracts investors back to US bonds rather than riskier assets.
- The dollar-rupee pair could trade in the range of 67.23-67.55 with upside bias in the near term, says forex advisory firm, IFA Global.
- “We don't see the pressure on the rupee easing to lesser value in coming future especially after demand for the greenback as crude oil prices have risen... It will further depreciate as crude prices are rising globally,” said Amit Kachroo, managing partner at AANEEV Wealth.
- Higher global oil prices helped lift US bond yields. The 10-year US Treasuries yield ticked up more than two basis points to 2.991 per cent.
- The steep rise in US short-term rates has been one of the major reasons for depreciation of emerging market currencies, including the rupee, says forex advisory firm IFA Global. With the crude hardening at above $75-plus levels, experts see more weakness in the rupee.
- The dollar-rupee may touch 67.50 in the near term, says Salil Datar, CEO and executive director, Essel Finance VKC Forex.
- Higher US bond yields tend to make the dollar more attractive to investors. The dollar index, which measures the greenback against a basket of six major currencies, was up 0.1 per cent at 93.199, close to its highest level so far this year.
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