Rupee ends flat as robust importer hedging blunts oil price relief

The Indian rupee remained steady on Monday, failing to capitalize on the recent drop in oil prices despite robust hedging activities by importers and state-run banks. The currency fell slightly from a 3-week high of 95.1275, hitting 95.3375 per dollar, compared to the previous close of 95.38. The rupee gained some momentum following talks between the United States and Iran, which occurred on Monday, and a subsequent increase in global stock markets, including those in Mumbai.

The rupee benefited from lower oil prices, but "there were very strong dollar bids around 95.15 levels from state-run banks, likely on behalf of clients," according to a trader from a Mumbai-based bank. President Donald Trump has repeatedly threatened to escalate the war in Iran, launched jointly with Israel in late February, but has since agreed to buy more time for negotiations, which have yet to result in a comprehensive agreement.

The dollar index held steady at 99.7, while most Asian currencies showed an upward trend. The Japanese yen hit a three-month high after the U.S. and Japan confirmed joint intervention to stabilize the weak currency, with Japan reportedly spending up to $36.58 billion to purchase yen. In India, the Reserve Bank of India will likely decide on Wednesday whether to maintain its policy rates unchanged.

IFA Global, an FX advisory firm, advises exporters to cautiously hedge their foreign exchange exposure up to the level of in-hand orders, while importers can take advantage of the current rates to secure protective measures.