5 days ago
Rupee Opens Higher as RBI Support Caps Dollar Pressure
The Indian rupee became slightly stronger against the US dollar on Friday.
It opened at 95.51 rupees for one dollar.
This week, it has stayed within a fairly narrow range.
The Reserve Bank of India may step in to prevent the rupee from weakening too much.
Importers may buy more dollars if the rupee gets close to 95.00.
Lower oil prices can help India’s currency, and Brent crude fell below $90 a barrel.
However, higher US bond yields and strong US economic data are supporting the dollar.
Investors are waiting for a speech by the Federal Reserve chief.
A tougher message could hurt the rupee, while a softer message could help it.
The rupee opened 3 paise higher at 95.51 against the US dollar on Friday.
The currency has traded between 95.40 and 95.75 this week, remaining range-bound.
RBI intervention is expected to limit moves beyond 96.00, while importer demand may support the dollar near 95.00.
Brent crude fell below $90 a barrel, offering some support to the rupee.
Markets are closely watching the Federal Reserve chief’s Jackson Hole speech for signals that could move the dollar.
- Who
- The Indian rupee, the Reserve Bank of India, importers, currency traders and the Federal Reserve chief.
- What
- The rupee opened 3 paise higher at 95.51 per US dollar while remaining within a narrow trading range.
- Where
- In the Indian currency market, against the US dollar.
- When
- Friday; the market is also watching the near-term impact of the Jackson Hole speech.
- Why
- RBI intervention and importer demand are helping contain the rupee’s range, while crude prices, US bond yields, labour-market data and Federal Reserve policy expectations are influencing the exchange rate.
Factors Supporting the Rupee
Factors Pressuring the Rupee
Central-bank intervention and importer demand
Factors Supporting the Rupee
Continued Reserve Bank of India intervention is expected to limit the rupee’s decline, while importer dollar demand may create a floor near 95.00.
Factors Pressuring the Rupee
Steady importer demand for dollars and month-end buying can offset gains and support the US currency.
Oil prices
Factors Supporting the Rupee
Brent crude’s decline below $90 a barrel has reduced pressure on the rupee and supported gains earlier in the week.
Factors Pressuring the Rupee
Oil prices remain near $90 a barrel, and elevated crude costs continue to be a concern for the rupee.
Federal Reserve outlook
Factors Supporting the Rupee
A dovish signal from the Federal Reserve chief could weaken the dollar and provide relief to the rupee.
Factors Pressuring the Rupee
A more hawkish-than-expected message could strengthen the dollar and put renewed pressure on the rupee.
Key facts
- Opening rate
- 95.51 rupees per US dollar, 3 paise higher
- Previous close
- 95.54 per US dollar on Thursday
- Weekly trading range
- 95.40 to 95.75
- RBI intervention level
- Intervention is expected to limit moves beyond 96.00
- Crude price
- Brent crude declined below $90 a barrel
- Key support zone
- 95.15–95.20, according to Amit Pabari of CR Forex Advisors
- Near-term projection
- USD/INR could drift toward 96.20–96.50 over coming weeks
- FCNR(B) window
- Open until 31 August and expected to provide near-term rupee support
Sources
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