Rupee trades in narrow range against US dollar in early trade
Forex traders said periodic dollar interventions by the Reserve Bank of India (RBI) helped smooth excessive intraday volatility and capped sharper losses for the rupee
The Indian rupee traded within a narrow range against the US dollar on Monday, settling around the significant 96 mark, as persistent pressure from high crude oil prices and ongoing foreign fund outflows weighed on the currency. Forex traders noted that occasional dollar interventions by the Reserve Bank of India (RBI) helped to limit excessive intraday volatility and prevent sharper declines for the rupee, while the overall macro backdrop of high import bills and a strong US dollar dampened investor confidence.
At the interbank foreign exchange market, the rupee opened at 96.20 per US dollar, subsequently slipping to 96.26, a 1-paisa decline from its prior close. The rupee plummeted below the psychologically important 96 per dollar threshold on Thursday, closing at 96.25 against the greenback. Trading in forex and equity markets came to a halt on Friday in observance of Mahatma Gandhi Jayanti.
The rupee ended its week at its weakest level in nearly two months, with Anindya Banerjee, Head of Commodity and Currency Research at Kotak Securities, forecasting an upward trend for the pair within the 95.50–96.50 range, contingent on oil prices surpassing $100 per barrel, US yields hitting multi-year highs, and heavy foreign portfolio selling.
The Reserve Bank of India had been actively intervening, as evidenced by a $18 billion drop in foreign exchange reserves to $748 billion. Economists anticipate a 25 basis point increase in the policy rate to 5.50 percent during the upcoming Monetary Policy Committee meeting.
Factors influencing the USD/INR pair include US services data, Federal Reserve minutes, and the RBI's decision on Wednesday, along with any confirmation from Saudi Arabia regarding weekend damage to their infrastructure. Despite potential Fed rate hikes in October and a possible RBI rate hike, such positive scenarios have not materialized, and any substantiated damage to Saudi Arabia's infrastructure would likely lead to an immediate upward movement in Brent crude prices toward the upper end of its range.
Written by urgent.news from Hindu BusinessLine's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
