Rupee Hovers Near 96 Amid Oil Prices and Foreign Outflows
The Indian rupee traded in a narrow range against the US dollar in early trade on Monday, hovering around the crucial 96 mark. Persistent pressure from elevated crude oil prices and sustained foreign fund outflows contributed to the rupee's volatility. The Reserve Bank of India's (RBI) periodic dollar interventions helped smooth out excessive intraday fluctuations and prevented sharper losses for the rupee. However, the overall macro environment, including elevated import bills and persistent greenback strength, weighed on investor sentiment.
At the interbank foreign exchange market, the rupee opened at 96.20, then fell to 96.26 against the US dollar, registering a fall of 1 paisa from its previous close. On Thursday, the rupee had slumped below the psychologically important 96 per dollar mark to close at 96.25. Forex and equity markets were closed on Friday for Mahatma Gandhi Jayanti. Anindya Banerjee, Head of Commodity and Currency Research at Kotak Securities, noted that the rupee closed at its weakest in over two months, with an upward bias for the pair within the 95.50-96.50 range.
The RBI has been active in defending the rupee, with a USD 18 billion fall in reserves reflecting the scale of that defense. The monetary policy committee is set to meet this week, with most economists expecting a 25 basis point increase to 5.50 percent. Key triggers for the USD/INR pair include US services data, the Fed minutes, the RBI decision on Wednesday, and any confirmation of damage in Saudi Arabia. Brent crude, the global oil benchmark, was trading lower by 0.89 percent at USD 101.34 per barrel in futures trade.
On the domestic equity market front, the Sensex rose 413 points to 72,315 in early trade, while the Nifty was trading 131.55 points higher at 22,554.20. Foreign Institutional Investors (FIIs) offloaded equities worth Rs 9,484.22 crore on a net basis on Thursday. Meanwhile, India's forex reserves dropped USD 18.343 billion to USD 747.557 billion during the week ended September 25, according to the Reserve Bank.