Oil prices firmed near the highest level in almost four years on expectations of a tighter market once US sanctions on Iran are effective next month. Concerns over tariff war and an emerging market sell-off in Turkey and Argentina also weighed on investor sentiment.
Traders remained cautious ahead of the Reserve Bank of India’s policy meet scheduled later this week. The Monetary policy committee may raise rates by 25 basis points on Friday, the third time this year, amid a higher crude and the weakening rupee, according to a Bloomberg survey.
The central bank on Monday said it will infuse Rs 36,000 crore via bond purchases this month to meet the festive season demand for funds. The auctions to purchase government bonds as part of the open market operations will be conducted in the second, third and fourth week of October.
Most of the Asian and emerging currencies, Gupta said, are calmer in the past one month. “The market is reacting strongly to Brent crude movements and with the current pace, 75 can likely be seen if crude touches 88-90 levels.”