Rupee stabilizes near 96 amid oil pressures and foreign outflows

The Indian rupee showed limited movement against the US dollar in early trading on Monday, maintaining a position around the 96 mark. The currency faced pressure from rising crude oil prices and ongoing foreign investment outflows. Forex traders noted that occasional interventions by the Reserve Bank of India (RBI) helped stabilize the rupee and prevent sharper declines, despite broader macroeconomic challenges.

At the interbank forex market, the rupee opened at 96.20 and later fell to 96.26, marking a 1 paisa drop from its previous close. Last Thursday, the rupee had fallen below the 96 mark for the first time in over two months, closing at 96.25. Markets were closed on Friday for Mahatma Gandhi Jayanti.

Anindya Banerjee, Head of Commodity and Currency Research at Kotak Securities, noted that the rupee's weakening trend is likely to persist within the 95.50-96.50 range, driven by high oil prices, rising US yields, and heavy foreign portfolio selling. He also highlighted upcoming triggers like US services data, Fed minutes, and the RBI's decision on Wednesday.

The dollar index rose 0.54% to 102.47, reflecting the greenback's strength, while Brent crude dipped 0.89% to $101.34 per barrel. Analysts expect the RBI to raise interest rates by 25 basis points to 5.50% at its upcoming meeting. Forex reserves fell $18.343 billion to $747.557 billion in the week ending September 25, following a previous decline of $14.881 billion.