Indian rupee (INR) today fell sharply against the US dollar (USD) as surging oil prices stoked fiscal slippage and inflationary concerns. The rupee fell to 69.88 against the US dollar at day’s low - its lowest level since March 11 - as compared to Thursday’s low of 69.36. Bond yields also hardened in the wake of rising oil prices. Indian stock and forex markets were closed on Friday. During the day, the rupee traded in the range of 69.50 to 69.88 against the US dollar, after opening at 69.76. Rupee, however, later pared some losses and ended lower at 69.67 a dollar.

Bond yields surged to over three-and-a-half-month high. The 10-year government bond yield ended at 7.475% - a level last seen on 11 January - from its earlier close of 7.39%. Bond yields and prices move in opposite directions.

Here are 5 things to know about USD vs INR trade today:

1) Global oil prices surged to near six-month high today after reports, citing sources, said that Trump administration won’t renew waivers that let countries buy Iranian oil without facing US sanctions, a move that could hit major importers such as China and India. The current set of waivers - issued to India, China and some other countries - expire on May 2. The price of Brent crude, the global oil benchmark, rose over 3% to above $74 a barrel, the highest intraday price in almost six months.

2) "This development could adversely impact the rupee. Iran is India's third largest supplier of crude," says forex advisory firm IFA Global in a report. Elevated crude prices could widen the country’s current-account deficit and stoke inflationary pressures.

3) “The reaction of the Reserve Bank of India will be interesting as it has been protecting 70 levels," IFA Global added.

4) Other Asian currencies are also trading weak against the US dollar. Indian stock markets ended sharply lower today, with Sensex falling nearly 500 points.

5) The RBI will tomorrow conduct a USD/INR buy/sell swap auction of $5 billion for tenor of three years, following the success of the first round last month. The RBI had earlier decided to inject rupee liquidity for longer duration through long-term foreign exchange buy/sell swap. The US dollar amount mobilized through this auction would also reflect in RBI’s foreign exchange reserves for the tenor of the swap while also reflecting in RBI’s forward liabilities.

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