The Indian rupee ended two days of declines after crude prices fell over bets that the ongoing Iraqi violence won’t affect oil supplies much.
The currency rallied 0.1 percent to trade at 60.1200 rupees per dollar in Mumbai trading. The rupee has lost 1.7 percent of its value so far this month after the Brent crude prices surged 4.4 percent. Brent prices fell 0.6 percent to $114.12 on Monday, the weakest price on a closing basis since June 17.
The Brent crude traded close to a one-week low after the Iraqi military wrestled back the control of Baiji oil refinery in the country’s north from Sunni militants. Moreover, violence has never extended to the southern region, where over three-quarters of crude oil is produced.
“Crude oil prices have come down and that is supporting the rupee,” Anindya Banerjee, a Mumbai-based currency analyst at Kotak Securities Ltd told Bloomberg. “The rupee in the short term will be guided completely by oil.”
India relies on imports to meet around 80 percent of its oil demand.
The rupee’s one month implied volatility, which measures the expected shifts in the exchange rate used to assign prices to options, plunged 0.16 percentage point, or 16 basis points to 7.61 percent.
The Russia’s ruble surged to its highest level since January, spurred by a Ukraine truce between government forces and rebels while Russian firms readied to remit domestic taxes. The ruble accelerated 0.4 percent to trade at 39.5121 versus the central bank’s target of currencies, and 0.4 percent to 33.9955 per dollar as of 11:16 a.m. in Moscow. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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