Rupee set to plumb to 2-month low at open on fears over oil-spurred outflows

MUMBAI, June 18 (Reuters) - The Indian rupee is set to open weaker on Wednesday, nearing a two-month low, weighed down by rising crude oil prices amid escalating Iran-Israel tensions and concerns over outflows.
The 1-month non-deliverable forward indicated a open in the 86.38-86.42 range, versus 86.24 in the previous session. The unit had already breached a support level on Tuesday, and traders said the bias remains firmly on the downside.
Brent crude futures climbed over 4% on Tuesday, with the rally holding firm through the Asian session on Wednesday, amid concerns that the ongoing Iran-Israel conflict could disrupt supplies.
The conflict has now entered its sixth day and anxiety is building over the risk of direct U.S. military involvement. U.S. President Donald Trump on Tuesday demanded Iran's unconditional surrender.
In a further development, three U.S. officials said Washington is deploying more fighter aircraft to the region to strengthen its military forces.
A prolonged conflict "raises the odds of oil staying bid", and that's "structurally bearish for Indian assets", leading to outflows, a currency trader at a Mumbai-based bank said.
He expects 86.50 to act an initial support zone, with markets staying alert to potential dollar sales by the Reserve Bank of India around that level, he said.
High oil prices tend to weigh on the Indian rupee due to the country's dependence on crude imports. A rise in oil directly increases the demand for dollars from oil companies and leads to a deterioration in the trade balance.
Meanwhile, the Federal Reserve's policy decision on Wednesday will be in focus alongside developments in the Middle East. While the Fed is widely expected to keep rates unchanged, market attention will be on any signs around the timing and extent of future rate cuts.
BofA Global Research expects the Fed's 2025 dot plot to shift higher, with the median projection rising by 25 basis points from the March estimate of 3.875%.
KEY INDICATORS:
** One-month non-deliverable rupee forward at 86.46; onshore one-month forward premium at 8.5 paise
** Dollar index down at 98.7
** Brent crude futures at $76.4 per barrel
** Ten-year U.S. note yield at 4.4%
** As per NSDL data, foreign investors sold a net $307.8mln worth of Indian shares on June 16
** NSDL data shows foreign investors bought a net $32.4mln worth of Indian bonds on June 16

Try Our AI Features

Explore what Daily8 AI can do for you:

Learn with AIFact CheckingText to SpeechAI Summary

Related Articles

Telegraph

23 minutes ago

• Telegraph

Protesters attacked outside Iranian Embassy

Police have arrested six men after protesters were attacked outside the Iranian Embassy in London. Two men have been treated for injuries at the scene and have been taken to hospital, the Metropolitan Police said. The attack comes amid the ongoing Israel-Iran war. Donald Trump, the US president, said that he would decide in the next fortnight whether or not his country would intervene in the conflict. The Iranian flag and posters are in the background outside the embassy, where an earlier protest took place. A Metropolitan Police spokesman said: 'At 09:53hrs on Friday, 20 June, officers responded to reports of an altercation in Prince's Gate, SW1. 'Six men have been arrested on suspicion of grievous bodily harm – they remain in police custody. 'Two men were treated for injuries at the scene and have been taken to hospital for further treatment by the London Ambulance Service. 'Police have cordoned off the area while initial investigations take place.'

Daily Mail​

29 minutes ago

• Daily Mail​

Panic mounts as social security's cash shortfall date revealed

The US Social Security and Medicare programs for seniors will both run short of funds to pay full benefits in 2033. The go-broke dates the two trust funds have moved up due to rising health care costs and new legislation affecting Social Security benefits, according to an annual report released Wednesday. The yearly assessment found that Medicare's hospital insurance trust fund will be unable to fully cover costs beginning in 2033 — three years earlier than last year's estimate. Higher-than-forecast hospitalizations of Americans over 65 years old was a key factor. Social Security's combined trust funds, which support retirement and disability benefits to 70 million Americans, are also expected to be depleted in 2033. While the year was unchanged from last year's report, it was advanced by three calendar quarters within that year. The projections reflect higher-than-expected healthcare spending, along with recent legislation that increased Social Security benefits for some workers. Once the funds are exhausted, beneficiaries would still receive payments, but at reduced levels. Medicare would be able to cover just 89 percent of hospital costs, while Social Security could pay only about 81 percent of promised benefits. The trustees say the latest findings show the urgency of needed changes to the programs, which have faced dire financial projections for decades. But making changes to the programs has long been politically unpopular, and lawmakers have repeatedly kicked Social Security and Medicare´s troubling math to the next generation. President Donald Trump and other Republicans have vowed not to make any cuts to Medicare or Social Security, even as they seek to shrink the federal government´s expenditures. 'The financial status of the trust funds remains a top priority for the administration,' said Social Security Administration commissioner Frank Bisignano (pictured) in a statement. The new forecast adds urgency to a long-standing challenge facing Congress, which has repeatedly delayed making reforms due to political sensitivity around the issue. Lawmakers would need to act — either by raising taxes, reducing benefits, or both —to ensure long-term solvency. President Donald Trump and many Republican lawmakers have pledged not to cut Medicare or Social Security benefits, but critics say recent legislative changes have worsened the programs' financial outlook. One provision enacted in January—the Social Security Fairness Act—eliminated two rules that had reduced benefits for certain workers, effectively increasing payments and accelerating the trust fund's projected depletion. Romina Boccia (pictured), director of budget and entitlement policy at the CATO Institute, called the change 'a political giveaway masquerading as reform.' Instead of tackling Social Security´s structural imbalances, Congress chose to increase benefits for a vocal minority-accelerating trust fund insolvency.' About 68 million Americans are currently enrolled in Medicare, and more than 70 million receive Social Security benefits. Both programs are primarily funded through payroll taxes, but costs are projected to outpace revenues due to the country's aging population and rising healthcare expenses. Experts say failure to act soon could result in sudden benefit cuts and instability for millions of retirees and disabled Americans. 'Congress must act to protect and strengthen the Social Security that Americans have earned and paid into,' said AARP CEO Myechia Minter-Jordan (pictured). Several policy proposals have been floated in recent years, but none have gained significant momentum. The last major reform to Social Security came in 1983, when the eligibility age for full retirement benefits was raised from 65 to 67. Without further legislative changes, the federal programs that serve as the backbone of retirement security in the US could face significant challenges within the next decade. Last year, billionaire CEO Larry Fink (pictured) said Americans should work beyond the age of 65 to stop the Social Security system collapsing. Meanwhile, experts recently said Americans are making a big mistake by claiming their Social Security checks early, since delaying their claims could lead to higher payments. Every year you delay taking a Social Security payment after full retirement age you receive a significant increase in payments up to the age of 70.

Reuters

30 minutes ago

• Reuters

India's infrastructure output rises 0.7% year-on-year in May

NEW DELHI, June 20 (Reuters) - India's infrastructure output (ININFR=ECI), opens new tab grew 0.7% year-on-year in May, government data showed on Friday. The index, which tracks activity across eight sectors and makes up 40% of the country's industrial production, grew at a revised 1% in April, compared to the initial estimate of 0.5%.