Rupee drifts higher, traders gauge if rally has legs to extend
It was last at 94.8225, up 0.1% from its closing level on Friday, hovering around its strongest in over a month
On Monday, the Indian rupee showed a slight uptick, bolstered by foreign lenders selling dollars and a minor decline in oil prices, leaving traders uncertain about the sustainability of the rally. The currency had increased by 2% in the previous week following a series of policy measures aimed at supporting it after it approached record lows.
As of the close on Friday, the rupee stood at 94.8225, a 0.1% rise from Friday's level, indicating a strength not seen in over a month. Analysts attribute the rupee's gains to dollar sales by foreign banks and lower oil prices, but they remain cautious, emphasizing that underlying fundamentals must improve for the currency to experience sustained gains.
The USD/INR pair is currently capped around 97, with traders closely monitoring whether it will surpass these levels in the near future and the reaction of the Reserve Bank of India (RBI) to any such movement. Brent crude oil prices witnessed a nearly 2% drop to $107.7 per barrel, following US President Donald Trump's waiver of sanctions and tariffs on Russia.
The dollar index remained stable at 101.8, with Asian currencies showing minimal change. The rupee, the second-best performer among regional currencies in October, has gained over 1.5%. As the USD/INR holds below the 95.00 mark for the past three sessions, the focus has shifted to the 94.80-94.70 range. A sustained drop below 94.80 may pave the way for further decline towards 94.00 in the coming weeks, according to Amit Pabari, managing director of FX advisory firm CR Forex. However, high crude oil prices continue to pose a significant risk to the currency's trajectory.
Written by urgent.news from Hindu BusinessLine's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
