Middle East worries, portfolio inflow hopes feed rupee bears and bulls alike

Reuters

4 hours ago

MUMBAI, June 20 (Reuters) - Lingering concerns over a potential escalation in the Iran-Israel conflict, coupled with expectations of portfolio inflows are fuelling mixed views on the rupee's trajectory for the coming week, traders said.
A spike in oil prices from a potential escalation in the conflict could weigh on the rupee, but an upcoming large IPO expected to draw foreign inflows may help recoup recent losses, they added.
The rupee has declined little over 1% this month so far, with a large stock of its decline occurring after Israel attacked targets in Iran last Friday.
The attacks also raised concerns about disruption of global oil prices, sending Brent crude oil futures to a five-month peak of $79 per barrel hit on Thursday.
The currency hit a three-month low on Thursday but eased 0.1% to 86.63 as of 11:05 a.m. on Friday, comforted by a dip in oil prices after the White House said President Donald Trump will decide in the next two weeks whether the U.S. will become involved in the Israel-Iran air war.
Meanwhile, expectations that Indian lender HDB Financial's $1.5 billion IPO is likely to draw sizeable inflows could are seen as a positive for the rupee, a trader at a private bank said.
The trader pointed out that he would prefer to keep tight stop-losses on speculative positions since the risk of two-way moves next week could be elevated.
On the technical front, the dollar-rupee pair is "nearing overbought territory, with a possible dip toward 86.35–85.95 before resuming an uptrend toward 87.80–88.00," said FX advisory firm Mecklai Financial said in a Friday note.
On the day, most Asian currencies ticked up as well with the Korean won leading gains. The dollar index eased below the 99 handle while India's benchmark equity indexes, the BSE Sensex (.BSESN), opens new tab and Nifty 50 (.NSEI), opens new tab rose about 0.9% each.