The Indian rupee ended Monday little changed, caught between a firmly rising US dollar, crude oil prices holding above $100 a barrel, and likely intervention by the Reserve Bank of India that kept the currency in a thin trading range. The rupee closed at 96.2925 per dollar, the Economic Times reported, barely changed from its previous close of 96.3150.
The dollar began the week on firm footing, hovering near a 17-month high. It was boosted by euro weakness amid worries over France's fiscal situation, a strain that pushed Asian currencies between 0.1% and 0.5% lower. Crude prices holding above $100 a barrel added to the pressure on India, an energy import-dependent economy where war-related supply concerns continue to keep fuel costs elevated.
The rupee's quiet session masks persistent underlying stress. After slipping below the psychologically important 96 level on Thursday to close at 96.25 — its weakest in over two months — the currency has been reliant on central bank intervention to avoid testing the record lows hit in May. Forex traders say the RBI has been stepping in periodically to limit intraday swings.
The scale of the pressure shows up in the forwards market: between January and September, importers booked $576.6 billion in forward hedges, far exceeding $305.6 billion by exporters, according to clearing house data cited by the Economic Times. Persistently heavy hedging by importers, combined with exporters staying on the sidelines, continues to weigh on the currency. India's foreign exchange reserves fell $18.343 billion to $747.557 billion in the week ended September 25, official data showed, partly reflecting the RBI's dollar sales.
On trade policy, Finance Minister Nirmala Sitharaman said on Monday that talks between India and the United States have reached a plateau and further concessions might be difficult.
Attention now turns to the RBI's monetary policy decision on Wednesday, where market participants widely expect a 25-basis-point increase in the benchmark repo rate. "While the inflation shock is largely supply-driven, we expect the RBI to raise rates to prevent inflation expectations from de-anchoring," Deepali Bhargava, regional head of research for Asia-Pacific at ING, said in a note.
Sources:
- Rupee ends flat, anchored by RBI intervention in face of global strains
- Rupee hovers near 96 as oil stays above $100 per barrel, foreign selling persists
The dollar began the week on firm footing, hovering near a 17-month high. It was boosted by euro weakness amid worries over France's fiscal situation, a strain that pushed Asian currencies between 0.1% and 0.5% lower. Crude prices holding above $100 a barrel added to the pressure on India, an energy import-dependent economy where war-related supply concerns continue to keep fuel costs elevated.
The rupee's quiet session masks persistent underlying stress. After slipping below the psychologically important 96 level on Thursday to close at 96.25 — its weakest in over two months — the currency has been reliant on central bank intervention to avoid testing the record lows hit in May. Forex traders say the RBI has been stepping in periodically to limit intraday swings.
The scale of the pressure shows up in the forwards market: between January and September, importers booked $576.6 billion in forward hedges, far exceeding $305.6 billion by exporters, according to clearing house data cited by the Economic Times. Persistently heavy hedging by importers, combined with exporters staying on the sidelines, continues to weigh on the currency. India's foreign exchange reserves fell $18.343 billion to $747.557 billion in the week ended September 25, official data showed, partly reflecting the RBI's dollar sales.
On trade policy, Finance Minister Nirmala Sitharaman said on Monday that talks between India and the United States have reached a plateau and further concessions might be difficult.
Attention now turns to the RBI's monetary policy decision on Wednesday, where market participants widely expect a 25-basis-point increase in the benchmark repo rate. "While the inflation shock is largely supply-driven, we expect the RBI to raise rates to prevent inflation expectations from de-anchoring," Deepali Bhargava, regional head of research for Asia-Pacific at ING, said in a note.
Sources:
- Rupee ends flat, anchored by RBI intervention in face of global strains
- Rupee hovers near 96 as oil stays above $100 per barrel, foreign selling persists
