The rupee started the day 18 paise lower at 93.31 against the US dollar on Tuesday, April 21, as traders according to news reports assessed the effects of the central bank’s partial rollback of foreign exchange restrictions, alongside ongoing geopolitical concerns about US-Iran relations.
After market hours on April 20, the Reserve Bank of India (RBI) lifted some previously imposed limitations on banks and corporates. Reuters news report indicated that the central bank rescinded guidelines that had prohibited banks from providing non-deliverable forwards (NDFs) to both resident and non-resident entities, and also lifted restrictions that stopped the rebooking of foreign exchange derivative agreements.
These measures were implemented about three weeks ago to mitigate arbitrage prospects between domestic and international currency markets. In conjunction with previous actions to restrict banks’ onshore position limits, these regulations have aided in the rupee’s rebound from its historic low of 95.21 hit in late March.
According to experts, the rupee and other Asian currencies are likely to remain under pressure amid uncertainty over a possible second round of US-Iran talks, especially with the two-week ceasefire deadline nearing its end.
They note that, going forward, the rupee’s trajectory will largely depend on two key factors—oil prices and geopolitical developments.
Crude markets have already reacted sharply. After a decline on Friday, Brent crude rebounded strongly, climbing close to $95 per barrel.
For India, this has direct implications. Higher crude prices translate into a larger import bill, which in turn increases demand for dollars—a dynamic that typically exerts downward pressure on the rupee.
Rupee Outlook
According to Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities, given the sensitivity of INR to oil prices and geopolitical developments, the overall bias remains cautious. In the near term, rupee is expected to trade in a range of 92.65–93.45.
Further, Amit Pabari, MD, Research Team, CR Forex Advisors, added that USD/INR is expected to find a base in the 92.20–92.50 range. However, as uncertainty lingers, the pair could gradually move higher towards 93.50–94.00 as markets rebuild directional bias.
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