The rupee has taken several months to react to every turn in the Middle East conflict and every surge in global crude oil prices. But analysts now believe the currency may be entering a more stable phase, with no sharp depreciation expected before the Reserve Bank of India (RBI) Monetary Policy Committee (MPC) meeting in August. Instead, they see the currency continuing to move in line with global crude oil prices, trading within a broadly stable range.Economists and market experts told ANI that fluctuations in global crude oil prices have the biggest impact on the rupee. While sustained high oil prices could add to inflationary pressures and widen India’s current account deficit (CAD), he ruled out a sharp decline in the currency and any immediate interest rate cut by the RBI.Oil prices are keyAnindya Banerjee, head of equities at Kotak Securities, said the recent rally in crude oil prices was driven more by supply route concerns than oil shortages.“Global supply is ample… This price increase is almost entirely driven by concerns around maritime supply bottlenecks – particularly the Strait of Hormuz… Once the Strait is fully opened, prices should fall and stabilize between $60 and $70 per barrel,” Banerjee explained.According to him, if Brent crude remains below $105 per barrel, the USD/INR pair is unlikely to move beyond 97.50. Instead, rupee may strengthen towards 94.00 due to improvement in forex capital inflows.No fixed line for Rs.Devarsh Vakil, head of research, HDFC Securities, said higher crude oil prices could put pressure on India’s external balance by widening the current account deficit and pushing up inflation. However, he said the RBI could focus on preventing excessive volatility in the currency market rather than defending a particular exchange rate.“I don’t think the 97 absolute level is a red line. Depending on data and geopolitical concerns, that level could change,” the lawyer said.He expects the USD/INR pair to remain in the 94.00-97.00 range and does not see the currency crossing the 100 mark under the current circumstances.Rupee is moving with crudeDebopam Choudhary, chief economist at Piramal Finance, said the recent fluctuations in the rupee closely mirrored the changes in crude oil prices.“Looking at how the currency is behaving – as we speak right now, it is below 96 – this is directly related to crude oil coming down from the over $100 level which it reached late last week,” Chaudhary said.“So there is a direct correlation between the West Asia crisis easing, crude oil prices falling below $100 and some strength in USD/INR,” Chaudhary said.He expects USD/INR to trade between 94.80 and 95.25 during the current quarter.Expectations of rate cut are limitedAnalysts also said higher crude oil prices could keep imported inflation high, making an interest rate cut less likely in the near term.Vakil said retail inflation could rise to 6 per cent by December, which may prompt the RBI to take a slightly more dovish stance in the August MPC meeting.Despite uncertainty over oil prices, analysts believe India’s strong foreign exchange reserves, subdued global crude demand and expected foreign capital inflows should help insulate the economy from external oil price shocks.