Mumbai: The Indian rupee moved within a narrow range against the US dollar in early trade on Monday, with high crude oil prices and continued foreign investor selling keeping the currency under pressure.
The rupee opened at 96.20 at the interbank foreign exchange market before slipping to 96.26, down one paisa from its previous close of 96.25.
Forex and equity markets remained closed on Friday for Gandhi Jayanti.
RBI Intervention Limits Rupee Losses
Forex traders said dollar sales by the Reserve Bank of India helped contain currency movements. However, higher import costs and a stronger dollar continued to weigh on sentiment.
Anindya Banerjee, Head of Commodity and Currency Research at Kotak Securities, expects the dollar-rupee pair to trade between 95.50 and 96.50, with a bias towards a stronger dollar.
He cited oil prices above USD 100, high US bond yields and heavy foreign portfolio selling as the pressures.
RBI Policy And Global Developments In Focus
Most economists expect the RBI to increase its policy rate by 25 basis points to 5.50 per cent this week, according to Banerjee.
Investors will track Wednesday’s RBI decision, US services data and Federal Reserve meeting minutes for signals.
Banerjee said any confirmation of damage to Saudi infrastructure could push Brent crude higher. He added that expectations of an October Fed pause and an RBI rate hike were already reflected in market prices.
Dollar Strength, Foreign Outflows Weigh
The dollar index rose 0.54 per cent to 102.47. Brent crude futures eased 0.89 per cent to USD 101.34 a barrel.
FIIs sold equities worth Rs 9,484.22 crore on Thursday. Meanwhile, Sensex gained 413 points to 72,315, while Nifty rose 131.55 points to 22,554.20 in early trade.
India Forex Reserves Decline
India’s foreign exchange reserves fell USD 18.343 billion to USD 747.557 billion in the week ended September 25, RBI data showed. This followed a USD 14.881 billion decline to USD 765.901 billion in the previous week.
