Rupee Opens Lower As Oil Surges On Saudi Attack

Rupee Opens Lower As Oil Surges On Saudi Attack

16 Sep 2019 09:18 AM

USD/INR – The Indian rupee opened lower against the dollar after crude oil prices soared following an attack on a major facility in Saudi Arabia, which cut oil production of the Middle East nation by half. The rupee opened at 71.62 compared with its previous close of 70.9150. Brent crude and benchmark U.S. oil jumped Monday following an attack on a critical oil facility of Saudi Arabia over the weekend. Iran-backed Yemen’s Houthi rebels claimed responsibility for the attacks on the world’s largest exporter of crude oil. U.S. Secretary of State Mike Pompeo on Twitter, however, blamed Iran for the attack and said there was no evidence that the attacks came from Yemen. He added that Washington will ensure that Iran is held accountable for the attacks. President Donald Trump remarked that there was “reason to believe that we know the culprit” and that U.S. was “locked and loaded depending on verification.” Trump further added that on account of the impact the attack may have on oil prices, he authorized the release of oil from the country’s Strategic Petroleum Reserve, if needed. Saudi Arabia’s energy minister said over the weekend that the attacks had cut the nation’s oil production in half.

EUR/USD – The euro was steady at $1.1077.  The euro gained against the dollar after the European Central Bank on Thursday exempted euro zone banks from a penalty charge, which analysts say will reduce the currency impact of new stimulus. The ECB on Thursday cut its deposit rate to a record low -0.5% from -0.4% and said it will restart bond purchases of 20 billion euros a month from November. The purchases will run for as long as necessary and end shortly before it starts raising the key ECB interest rates. It also said that euro zone banks will be exempted from paying a penalty charge on idle cash worth six times their mandatory reserves.

GBP/USD – The pound held last week's gains, as fears of Britain crashing out of the European Union without a divorce deal ebbed, while a news report on Friday also raised hopes that a deal could be secured by Oct. 31. It steadied just under its highest since July 25 at $1.2475. British Prime Minister Boris Johnson said on Sunday the next few days would be key to his chances of securing a Brexit deal, and that an agreement with the European Union was still his aim and still possible. With less than seven weeks remaining until Britain is due to leave the European Union, Johnson has yet to strike a deal with Brussels to manage the unprecedented separation between the world's fifth largest economy and its biggest trading partner. Johnson has pledged to leave the EU with or without a deal on Oct. 31, even though British lawmakers have passed a law which would force him to request a delay beyond that date if he is unable to reach a deal with the EU.

USD/JPY – The dollar fell while safe-havens currency yen rallied on Monday, following an attack on Saudi Arabian refining facilities that disrupted global oil supply and heightened Middle East tensionsOil prices surged more than 15% following the strikes on two plants, including the world's biggest petroleum processing facility in Abqaiq, knocked out more than 5% of global oil supply. In the United States, investors who had begun trimming expectations for a U.S. Federal Reserve rate cut on Wednesday are now certain rates will fall and divided only over how much. Markets also expect the Bank of Japan to push interest rates further into negative territory, with a third of economists polled expecting stimulus to be ramped up. The yen hit 107.80 per dollar.

Currency Range for today

Currency Pair Lower Upper
USD/INR 71.25 71.75
EUR/INR 78.80 79.60
GBP/INR 88.85 89.65
JPY/INR 0.6600 0.6660

Important data releases today

Time Ccy Event Forecast Previous
12:00 PM INR WPI Food (YoY) (Aug) - 6.15%
12:00 PM INR WPI Fuel (YoY) (Aug) - -3.64%
12:00 PM INR WPI Inflation (YoY) (Aug) 1.04% 1.08%
12:00 PM INR WPI Manufacturing Inflation (YoY) (Aug) - 0.34%