Indian rupee ends flat, hemmed in by RBI intervention, oil pangs
MUMBAI: The Indian rupee traded in a narrow range on Monday, wedged between sustained market intervention by the Reserve Bank of India and a rise in oil prices as strikes on vessels sailing through the Strait of Hormuz stoked worries over energy flows. The Indian rupee closed at 94.4850 per dollar, unchanged from its closing level on Friday. The currency spent the session in about a 10-paisa…
On Monday, the Indian rupee remained stable, its value staying unchanged against the US dollar at 94.4850 per dollar. This stability was due to the Reserve Bank of India's ongoing intervention in the foreign exchange market and rising oil prices. The currency fluctuated within a tight 10-paisa range throughout the day. The intervention was similar to the previous two weeks, where the central bank's dollar selling had kept the rupee strong.
The Reserve Bank of India sold at least $8 billion last week to support the local currency. Despite this, oil prices hovered near 6-week highs, with Brent crude oil futures trading at $96.6 per barrel. Goldman Sachs predicts oil prices could surge to as high as $120 per barrel if attacks on shipping increase in the Strait of Hormuz.
Iran announced plans to create a restricted zone in the Persian Gulf and a new shipping route through the Strait of Hormuz. Analysts at ING believe that higher energy costs and possible Federal Reserve rate hikes may provide some support to the dollar in the near term. Traders estimate a 57% chance the Federal Reserve will raise rates this month, following positive job data.
Currently, market attention is shifting towards inflation data due to be released on Friday. The dollar index slipped 0.2% to 98.9, while Asian currencies exhibited mixed performance. Indian stocks declined 0.6% on the day, while MSCI's Asian stock index rose nearly 2%, driven by an increase in artificial intelligence-related stocks.
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