CURRENCY OVERVIEW
Rupee feels pressure at opening with a marginal slip. Rupee closed nearly flat on Thursday at 95.26. Though the rise in crude oil prices continues to put depreciation pressure on the rupee, active intervention by the RBI has helped cap losses. Rupee is likely to draw support from a retreat in the dollar and a plunge in US Treasury yields at Friday's open. A fresh bout of AI-related jitters sparked a flight to safety in markets, driving investors into US Treasuries, pushing the two-year yield down 8 ?basis points to its lowest level in seven weeks. The 10-year Treasury yield slipped to 4.90%, down 46 basis points from its recent peak. The dollar, however, failed to benefit from safe-haven demand, with the dollar index falling to 101.70 with the decline in US yields weighing on the currency. Asian currencies traded flat to modestly higher. For the rupee, any support from the decline in ?US yields is likely to be limited since it is primarily driven by a flight to safety. The jump in oil ?prices will more than offset that relief. The yen inched higher on Friday after the Bank of Japan held rates steady as expected, while the dollar tracked Treasury yields lower as a fresh wave of selling in AI shares triggered a flight to safety. The BOJ left interest rates on hold at 1.25% in a widely anticipated move, but revised up its inflation forecast and stressed anew its readiness to continue pushing up borrowing costs to forestall mounting inflation risks. Following the decision, the yen strengthened to a high of 157.115 per dollar, erasing most of its losses for the month and putting it on track to end October broadly flat. Investors are now awaiting Governor Kazuo Ueda's news conference at 0630 GMT for further clues on the policy decision and the future path of interest rates. The euro was last 0.15% stronger at $1.1197 against the greenback after briefly dipping to its lowest since May 2025 in the previous session, and was on track for a 1.2% monthly drop. Sterling strengthened 0.2% to $1.34, and was up 1% for the month. Oil prices rose on Friday — set for a fourth monthly gain — as an attack on a tanker in the Strait of Hormuz highlighted the continuing supply risks from the US-Israeli war on Iran, which has entered its eighth month. Brent crude futures for December , which expire on Friday, advanced $1.20, or 1.04%, to $116.08 a barrel as of 0323 GMT. The more-active January contract gained $1.39 to $112.19. For the month, Brent was on course to finish nearly 11% higher, while WTI was heading for a 14% jump. Continued kinetic action around the Strait of Hormuz amidst doubts of a viable diplomatic pathway are keeping oil prices elevated in expectation of an escalation of the conflict in coming weeks. Oil prices could become even more ?volatile in the next couple of weeks due to Israel's parliamentary election and the US midterm congressional vote, Ole Hansen, the head of commodity strategy at Saxo Bank. Gold slipped on Friday as higher oil prices spurred inflation concerns and robust US inflation data strengthened the case for another Federal Reserve rate hike later this year. Spot gold was down 0.6% at $3,997.39 per ounce by 0255 GMT, while US gold futures for December delivery dropped 0.6% to $4,007.80. Bullion was on track for a ?second consecutive monthly decline. Spot ?silver slid 2.1% to $51.27 per ounce, platinum dropped 1.9% to $1,458.85 and palladium fell 2% to $986.08. All three metals were headed for weekly and monthly declines.
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