Dubai: The Indian rupee is softening to 23 against the dirham as the currency markets felt the ripples from the escalation of the conflict on the border. The INR had closed yesterday at 23.98.
So, it’s back to 23 plus levels for the rupee after its recent strengthening, and the next few days could be extremely fluid for the INR as geopolitical tensions play out.
Given the tensions in the Indian sub-continent, coupled with global trade uncertainties and expectations of RBI rate cuts, the Indian rupee is likely to face short-term depreciation,” said Krishnan Ramachandran, CEO of Barjeel Geojit Financial Services.
“The USD-INR rate could move toward the 23.2-23.35 to dirham (85.25–85.75 for dollar) range over the next 1-2 months, as markets react to elevated regional risk, capital outflows, and a softer monetary stance by the Reserve Bank of India.”
Sensex is down
The main India stock market index also slipped initially after a fairly solid week. Trading has started with the index lower by 0.19% to 80,641 points. Then things returned to green territory.
Investors are still assessing whether there will be an across the board dip when it comes to key sectors.
“The Indian markets have opened on a jittery note,” said Milan Vaishnav, Technical Analyst at ChartWizard.ae. “But, there is also a very resilient note in investor sentiments.
“The Nifty and the BSE Sensex opened around 0.70% lower, but soon recouped all their losses in the first 15 minutes of the trade. Now, all key indices trade in the positive, with the Nifty Bank index strongly outperforming the broader markets, gaining 0.51%.
“Overall, it is strongly advised that Investors remain reactive to market developments and not become predictive.
“The zone of 23,950-24,050 remains a crucial support area for the Nifty, and so long as this zone is defended, the markets will consolidate and not show any major drawdowns.
“The FIIs have continued to be net buyers; they were net buyers to the tune of Rs37 billion yesterday.”
Likely Rupee range
It was in late November 2024 that the INR first dropped to 23. “Not just the India-Pakistan conflict, the other factor to weigh on the INR will be the US Federal Reserve’s meeting today (May 7),” said Neelesh Gopalan, Senior FX analyst.The lowest point for the Indian rupee was 23.94 on February 10, 2025.
