Rupee Opens At 93.64/$ On Oil Pullback After Trump Signals Diplomatic Talks

Amid diplomatic talks between the US and Iran, and decline in oil prices, the rupee opened at 93.64/$ as against Monday’s close of 93.98 per USD.

This comes after Brent crude dropped 11% on Monday after Trump's decision to delay to attacks on Iran's power plants, adding the US had held productive talks with unnamed Iranian officials. US equities advanced, the dollar dropped and U.S. Treasury yields declined.

Part of these moves reversed in Asian trading, with Brent recovering nearly 4%. Asian equities rose, though they were well off their highs.

Iran's denial of talks with the US, coupled with a Wall Street Journal report that Saudi Arabia and the UAE are inching towards joining the fight against Tehran dented the positive sentiment triggered by Trump’s remarks.

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"From Asia’s perspective, what matters is the physical flow of barrels (via the Strait of Hormuz), and over here time is of essence," MUFG Bank said in a note.

The 1-month USD/INR had dropped to a low of 93.35 immediately after Trump's remarks, which would have meant that the rupee would have risen past the 93 handle. However, with oil prices marching higher, the 93 level looks "out of the question", a currency trader at a Mumbai-based bank said.

"Basically all markets are chasing headlines and looking at oil," he said. The rupee is at levels "which look really attractive, however you just do not know how Iran situation will play out and that keeps conviction low".

Indian equities were poised to open higher, according to futures, though they too were well off the highs seen after Trump’s remarks.
 

(With Reuters Inputs)