Rupee little changed as inflows cushion pressure from elevated oil prices
MUMBAI, June 18 (Reuters) - The Indian rupee remained largely unchanged on Wednesday as pressure from elevated oil prices amid escalating Israel-Iran tensions offset mild foreign portfolio inflows, traders said.
The rupee was at 86.3225 against the U.S. dollar as of 1:00 PM IST, down slightly from its close at 86.24 in the previous session.
While the rupee opened weaker, it pared declines following dollar sales from at least two foreign banks, likely on behalf of custodial clients, a Mumbai-based bank trader said.
Asian currencies were largely rangebound, save for the Philippine peso, that fell more than 1% with analysts pointing to vulnerability from elevated oil prices and a potential rate cut by the country's central bank.
Oil prices have climbed more than 17% this month as tensions in the Middle East escalated. The Israel and Iran air war entered its sixth day on Wednesday with U.S. President Donald Trump calling for Iran's unconditional surrender.
"A prolonged conflict in the Middle East could further hurt global risk sentiment," MUFG Bank said in a note, adding that geopolitical developments would continue to dominate FX moves across Asia.
Asian equities were mostly lower on Wednesday reflecting the tepid risk appetite. India's benchmark equity indexes, the BSE Sensex (.BSESN), opens new tab and Nifty 50 (.NSEI), opens new tab, down about 0.3% each as well.
Investors' focus is now on the U.S. Federal Reserve's policy decision, due later in the day.
While the central bank is widely expected to maintain rates unchanged, investors will monitor changes to future policy rate projections and commentary from Chair Jerome Powell.
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